airservices australia - annual report 2006-2007 · 2020. 8. 27. · 7 chief executive officer’s...

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Annual Report2006–2007

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© Airservices Australia 2007

This work is copyright. Apart from any use as permitted under the Copyright

Act 1968, no part may be reproduced by any process without prior written

permission from Airservices Australia. Requests and enquiries concerning

reproduction rights should be addressed to:

Manager, Public Affairs

Airservices Australia

GPO Box 367

Canberra City ACT 2601

Telephone (02) 6268 4111

Fax (02) 6268 5688

ISSN 1327-6980

Web address of this report:

http://www.airservicesaustralia.com/profile/annualreports/annualreports.htm

Produced by Airservices Australia

Design and layout by Airservices Australia (02) 6268 4111

Edited and indexed by WordsWorth Writing (02) 6232 7511

Printed by New Millennium Printers 1300 362 679

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Contents

Letter of transmittal 1

Chairman’s report 3

Chief Executive Officer’s report 7

CORPORATE OVERVIEW 11

Enabling legislation, objectives and functions 11

Annual reporting requirements and responsible Minister 13

Principal activities 16

Corporate structure 17

Airservices Pacific Incorporated 20

Corporate governance 20

Standards of Service Charter 23

Adverse effect of non-commercial commitments 23

REVIEW OF OPERATIONS 24

Operational results 24

Key result area: Safety 24

Key result area: Environment 30

Key result area: Operational excellence 35

Key result area: Customers and markets 39

Key result area: Employees 41

Key result area: Owner 42

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Ministerial directions 43

Stakeholder involvement and consultation 43

Financial results 44

Significant changes in the state of affairs during the financial year 44

Developments since the end of the financial year 44

FINANCIAL STATEMENTS 45

APPENDICES 103

Appendix 1: Board membership, meetings and committees 104

Appendix 2: Statutory and administrative information 110

Appendix 3: Statement of expectations 121

Appendix 4: Staffing statistics 127

Glossary 128

General index 130

Compliance index 140

1

19 September 2007

The Hon Mark Vaile MP

Deputy Prime Minister

Minister for Transport and Regional Services

Parliament House

CANBERRA ACT 2600

Dear Deputy Prime Minister

The members of the Board of Airservices Australia hereby submit to you the Airservices Australia

Annual Report for the period 1 July 2006 to 30 June 2007.

This report has been prepared in accordance with the requirements of the Air Services Act 1995

and in accordance with section 9 of the Commonwealth Authorities and Companies Act 1997

(CAC Act).

Under section 9 of the CAC Act, Airservices Australia Board members are responsible for

producing an annual report in accordance with both the rules of that Act and the Finance

Minister’s Orders.

The report was approved by the Board.

Yours sincerely

Nick Burton Taylor AM

Chairman

Letter of transmittaL

3

Chairman’s report

2006–07 has been a demanding year in

the aviation industry and for Airservices

Australia. With high fuel prices,

increasing presence of low cost carriers

and security concerns, the industry

is looking for improved operational

efficiency and greater use of leading

edge technology.

This year the Board agreed a new Corporate Plan to take effect from 1 July 2007 and operate until

2012. The Plan sets out the strategic direction, business outlook, strategic and target outcomes

for the organisation. The groundwork for much of the future has taken place over the past year.

To position the organisation to be responsive to emerging challenges significant reform in the

shape of a business remake has been undertaken. The focus has been to better tailor air traffic

control and other service delivery to the differing needs of the various industry sectors. A great

deal of effort has been put into meeting with, consulting and informing industry. I am pleased

to report that the reorganisation into a Service Delivery Environment is underway and that

significant progress has been achieved.

Work done during the year resulted in the successful transfer, on 1 July 2007, of airspace

classification and designation functions from Airservices to the Civil Aviation Safety Authority

(CASA). This has removed the last vestige of airspace regulation from the organisation, allowing

us to give a dedicated focus to our core business of air traffic management.

The Board of Airservices sees Automatic Dependent Surveillance-Broadcast (ADS-B) as a potential

future civilian air traffic surveillance and separation tool. ADS-B has the potential to greatly

enhance our air traffic system capability and provide more comprehensive services to pilots.

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Airservices Australia has progressed with the program for implementing ADS-B in Australian

upper airspace. Five new ADS-B ground stations were commissioned during July and August,

bringing the total number in operation to 10. Under the Upper Airspace Program, 28 ground

stations are planned at strategic locations to provide almost nationwide air traffic control

surveillance capability above 30 000 feet.

Twelve months ago, the airline industry was quietly working toward cutting down its emissions.

In 2006–07 the International Air Transport Association and the United Nations encouraged the

aviation industry to take a more prominent role in reduction of greenhouse gasses. While air

navigation service providers have a very limited carbon foot print they can play a significant role

in reducing the emissions made by their customers. Airservices has been at the forefront of such

initiatives and will continue to lead in the implementation of practices and procedures to reduce

fuel burn and, consequently, carbon emissions.

The Board has maintained a regional agenda with continued attention to the development of

our neighbourhood strategy. Key partners are Indonesia and Papua New Guinea. Collaboratively,

we have established a Regional Safety Roadmap Working Group. The working group is just one

part of the systematic engagement with our neighbours to standardise safety management

within the subregion. Airservices commitment to these partnerships stems from the desire

to harmonise safety and operational regimes so as to achieve a seamless airspace between

ourselves and our neighbours.

Airservices continues to build on its business development activities in the Persian Gulf, India and

China with the planned establishment of regional representation in these key areas. During the

year Airservices won a contract in Mumbai at Chhatrapati Shivaji International Airport to assist in

the development of an internationally recognised aviation rescue and fire fighting capability.

Philippa Stone resigned as a Director of Airservices on 29 June 2007 to take up an appointment

with the International Air Services Commission. Ms Stone had been a Director of Airservices since

early 2005 and made a very strong contribution to the Board. I thank her for her commitment to

the aviation industry and Airservices.

We will advance with all our strategic directions in the coming year. We anticipate improving

delivery of our domestic services whilst also strengthening our relationships in the neighbourhood.

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In doing so, we intend to maximise the potential of emerging and existing technologies to

improve our services and to address community concerns about carbon emissions to the

greatest extent that we are able.

Nick Burton Taylor AM

Chairman

30 June 2007

7

Chief exeCutive offiCer’s report

In November 2006, the Board adopted

a new vision for Airservices Australia

—to be a focussed provider of air navigation

and aviation services, with our competitive

edge built on safety and the application of

leading edge technology.

I am pleased to report that we are well on the way. The organisation is now being operated

as a business.

The year 2006–07 was one of both consolidation and further organisational change. The

benefits of the restructure in 2005–06 are becoming evident across the organisation. In air traffic

control—our core business—we have begun the move to a service delivery environment, rather

than one based on geographic delineation. This transition is an important first step towards

building the Airservices Australia of the future.

safetySafety is, and always will be, Airservices’ number one priority and an ongoing focus of the Board,

Executive team and staff. An important step towards improved safety occurred during the year

with the implementation of a common risk management framework with the other major

organisations involved in airspace management—the Civil Aviation Safety Authority (CASA), the

Department of Transport and Regional Services and Defence.

Airservices updated its ‘Just Culture’ program to standardise managerial decision making, built

a new operational database to improve the understanding of potential risks at major regional

airports throughout Australia and implemented the second Normal Operations Safety Survey

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to identify potential risk while continuing to work with general aviation to minimise runway

incursions and controlled airspace incursions.

During 2006–07, Airservices expanded its work with neighbouring nations with a view to

developing improved and harmonised safety across the region. We hosted the inaugural Asia–

Pacific Air Navigation Service Provider (ANSP) Conference from 16 to 18 August 2006 to progress

the Regional Safety Roadmap agreed to by the International Civil Aviation Organization. ANSPs,

airlines and regulators from 12 countries in the Asia–Pacific region attended the conference and

agreed to a work plan that included regional cooperation on seamless airspace trials and on

safety benchmarking.

Airservices has engaged an external safety consultant—former United Kingdom NATS Chief

Executive Officer and Chairman Bill Semple—whose task is to question everything we do.

Mr Semple’s contributions over the past year have been significant.

environmental leadershipThe organisation continues to devote major effort to the task of minimising carbon emissions by

the aviation industry. We implemented a number of operational reforms, which will be improved

in 2007–08. These initiatives are detailed in the body of this report.

operational and technological efficiencyThe development of the Ground-based Augmentation System (GBAS) continued during the

year and, in late November 2006, Airservices equipment was employed for the world’s first

GBAS landing involving fee-paying passengers. GBAS will eventually replace instrument landing

systems around the world.

The update of technology systems was an ongoing feature of Airservices operations during the

year. Advanced surface movement guidance and control systems are expected to be operational

at Brisbane, Melbourne and Sydney airports by 2008. These systems will replace existing surface

surveillance radar, providing air traffic controllers with a comprehensive view of the airports for

greater operational efficiency and safety in all weather conditions.

Planning and approval for other key projects during the year included stage one of the National

Towers project for the replacement of control towers at Melbourne, Adelaide, Canberra and

Rockhampton airports over the next three years, the Telecommunications Infrastructure Network

Replacement (TINR) project to provide high-speed, broadband digital communications by 2008

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and Wide Area Multilateration (WAM) - a new terminal area surveillance system for airspace

servicing Sydney, Launceston and Hobart airports.

Australia’s newest aviation rescue and fire fighting (ARFF) station at Hamilton Island was officially

opened by the Parliamentary Secretary to the Deputy Prime Minister and Minister for Transport

and Regional Services, Mrs De-Anne Kelly, in March 2007. The station will provide a first response

to emergencies at the airport, ensuring the safety of the hundreds of thousands

of tourists visiting the island each year.

Commercial activityA major continuing initiative is the development of the commercial activities of the organisation.

These are focussed both on geographic regions (Gulf, India and China) and on our core expertise.

Additionally the organisation has been involved in a neighbourhood strategy referred to by the

Chairman in his report. To support the commercial strategy, Airservices has opened offices in

Dubai, New Delhi and more recently in Singapore.

In 2007, Airservices signed an agreement with Mumbai International Airport Ltd to provide ARFF

consultancy services at India’s busiest airport, the Chhatrapati Shivaji International Airport.

The commercial aspects of the organisation’s operations are expected to show further

improvement during the coming year.

financeAirservices recorded a strong result for the year, with net profit after tax of $106.8 million, an

increase of $13.2 million on 2005–06. This result equates to a return on average equity after tax

of 30.4 per cent compared to a target of 25.3 per cent in Airservices’ Corporate Plan.

The profit for the year reflected continued airways growth, mainly in domestic operations, the

impact of asset revaluations and increased costs being limited to once-off increases following

the success of cost management initiatives during the year.

As part of the long-term pricing agreement approved by the Australian Competition and

Consumer Commission and in line with a risk-sharing arrangement, some $14.9 million was

returned to customers during the year.

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airspace regulationA milestone in the past year was the transfer of regulatory functions from the Airspace and

Environment Regulatory Unit to the Office of Airspace Regulation in CASA, marking the end

of Airservices involvement in regulation. I would like to record my special thanks to the many

Airservices and CASA staff who ensured a smooth transition of this important function.

our peopleAirservices employs about 3 000 people. It is due to their dedication and hard work that we

are able to maintain an impressive safety record, while delivering improved efficiencies to the

Australian and international aviation industry. During any period of change the morale of staff

needs to be closely monitored and during the annual employee survey conducted in May, I am

pleased to report a high degree of response and an improvement in the levels of

staff engagement.

My thanks to all our staff for what has been another year of substantial progress.

Greg Russell

Chief Executive Officer

30 June 2007

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Corporate overvieW

enabling legislation, objectives and functionsAirservices Australia operates under the Air Services Act 1995 and is also subject to the

Commonwealth Authorities and Companies Act 1997 (the CAC Act).

Amendments to the Air Services Act in March 2007 authorised the corporation to participate

in a wider range of external and international business opportunities.

Under the Act, Airservices provides the following services and facilities:

for the purpose of Australia or another country giving effect to the Chicago Convention or to •

another international agreement relating to the safety, regularity or efficiency of air navigation or

otherwise for purposes relating to the safety, regularity or efficiency of air navigation, whether •

in or outside Australia

promoting and fostering civil aviation•

co operating with the Executive Director of Transport Safety Investigation in relation to •

investigations under the Transport Safety Investigation Act 2003 that relate to aircraft

carrying out activities to protect the environment from the effects of, and the effects •

associated with, the operation of:

Commonwealth jurisdiction aircraft, whether in or outside Australia or -

other aircraft outside Australia -

any functions prescribed by regulations in relation to the effects of, and with, the operation •

of Commonwealth jurisdiction aircraft, whether in or outside Australia or other aircraft

outside Australia

any functions conferred on Airservices under the • Air Navigation Act 1920 or the Aviation

Transport Security Act 2004 or by regulation

consultancy and management services relating to any of the above matters.•

services and facilities, whether or not related to aviation, for a purpose other than one that is •

mentioned or implied in any of the above. If doing so:

is within the executive or legislative powers of the Commonwealth -

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utilises Airservices spare capacity -

maintains or improves the technical skills of Airservices employees and -

does not impede Airservices capacity to perform its other functions -

Airservices is responsible for the provision of air traffic services, an aeronautical information, radio

navigation and telecommunications service and aviation rescue and fire fighting services.

The Air Services Regulations 1995 gave Airservices Australia various functions, including:

designating air routes and airways•

making directions for air routes, airways and facilities•

making determinations in respect of aerodromes and airspace•

publishing particulars of air traffic services•

declaring prohibited, restricted or danger areas•

publishing declarations•

designating flying training areas•

In the day-to-day performance of Airservices’ functions, it is subject to and empowered by a range

of other legislation. A full list is available on our website at http://www.airservicesaustralia.com

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annual reporting requirements and responsible ministerAirservices Australia is accountable to the Australian Parliament and to the Government through

the Minister for Transport and Regional Services, the Hon Mark Vaile MP.

Under the Air Services Act and section 9 of the CAC Act, the corporation must provide an annual

report for tabling in Parliament.

The report has been prepared in accordance with the Air Services Act, the CAC Act and the

Finance Minister’s Orders.

Airservices Australia’s vision and values

Our vision: To be a focussed provider of air navigation and aviation services, with our

competitive edge built on safety and the application of leading-edge

technology.

Our values: We recognise the need for:

Keeping safety first•

A collective, consistent sense of organisational identity•

Strong, credible and accountable leadership•

Our management and staff to be outward looking, both present •

and future oriented, and to embrace challenges proactively

A spirit of unity, teamwork and trust.•

In 2007, Airservices released its Corporate Plan for the period from 1 July 2007 to 30 June 2012.

The plan continues the broad strategic direction set out in the previous plan. However, there

has been some refinement of the business strategies and supporting key actions and programs.

Significant changes from the previous plan include:

a new Airservices Vision Statement focussing on the safety and technology drivers •

of the business

changed planning assumptions for transfer of regulatory functions and activity growth rates, •

and additional assumptions related to the Minister’s Statement of Expectations

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additional programs, such as neighbourhood support and air traffic control reform.•

focussing business growth on the expansion of our core service lines and the development •

and commercialisation of global navigation satellite solutions products and Automatic

Dependent Surveillance–Broadcast managed services in domestic and international markets.

Airservices Australia’s strategic intent, articulated in the corporation’s 2006–2011 Corporate Plan,

is to:

maintain and improve the safety and environment of the Australian air transport system•

be the preferred global partner for air traffic and related aviation services•

create value for our owner, our customers, our staff and other stakeholders.•

Figure 1 shows the links between Airservices Australia’s corporate objectives and strategies

and the results against key performance indicators detailed in the Report of Operations.

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FIgure 1 PERFORMANCE FRAMEWORK

DRIVERS

Australian Government priorities Industry priorities Legislation

Statement of Expectations (page 121)Ministerial directions (page 43)

Governance guidelines

page 35–37 Air Services Act 1995Commonwealth Authorities

and Companies Act 1997

STRATEGIC INTENT

Maintain and improve the safety and environment of the Australian air

transport systemBe the preferred global partner for air traffic and related aviation services

Create value for our owner, our customers, our staff and

other stakeholders

PLANS

Airservices Australia Corporate PlanJuly 2006–June 2011

Key result areas Corporate objectives Results

Safety To maintain world leading safety performance by keeping safety first in the efficient delivery of all our services and by understanding and managing our risks

page 24

Environment To foster environmental management standards which are recognised as best practice in the global aviation industry

page 30

Operational excellence To achieve sustainable competitive advantage through customer focussed and efficient processes and systems and leadership in innovation

page 35

Customers and markets To maximise our domestic market share and extend market reach in our core businesses by delivering superior customer value

page 39

Employees To achieve a skilled, motivated, flexible and customer focussed workforce committed to continuous improvement and innovation in our business

page 41

Owner To meet the government’s requirements for financial returns, increasing value in the business and maintaining positive relationships with key industry, regulatory and community groups

page 42

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principal activities

FIgure 2 THE AUSTRALIAN FLIGHT INFORMATION REGION

Approx 5000nm

Brisbane

Melbourne

Airservices Australia is a body corporate wholly owned by the Australian Government.

Airservices is responsible for providing safe and environmentally sound air traffic management

and related services to the aviation industry in the Australian Flight Information Region (FIR) and,

under contract with the Governments of Solomon Islands and of Nauru, in the upper airspace of

the Honiara and Nauru FIRs.

We provide communication, navigation and surveillance and air navigation services over

11 per cent of the world’s surface. This includes the Australian FIR (see Figure 2) and international

airspace over the Pacific and Indian oceans.

Airservices Australia delivers:

en route and terminal air traffic services•

aeronautical data services, such as charts and departure and approach procedures•

tower services at 26 airports•

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aviation rescue and fire fighting services at Australia’s 19 busiest international and domestic •

regular public transport airports

environmental services•

management of the Australian national air navigation infrastructure•

international and domestic aviation consultancy•

Airservices manages more than four million aircraft movements each year, and maintains a

$512 million fixed asset base at more than 600 sites around Australia.

Our customers include airlines, the general aviation industry including sport and recreational

flyers, the Australian military and airport owners.

Airservices Australia is a world leader in the technological development of advanced

communication, navigation and surveillance systems. We work with the International Civil

Aviation Organization to share information and advances in aviation technology and to maintain

global aviation safety standards.

In Australia, we work closely with other government organisations concerned with aviation

safety, regulation and search and rescue, such as the Department of Transport and Regional

Services, the Civil Aviation Safety Authority, the Australian Transport Safety Bureau and the

Australian Maritime Safety Authority.

Further information about Airservices Australia can be found on our website:

http://www.airservicesaustralia.com

Corporate structureIn 2006–07, Airservices Australia operated through the following business groups:

Air Traffic Control•

Air Traffic Control Reform•

Airspace and Environment Regulatory Unit •

Audit and Assurance•

Aviation Rescue and Fire Fighting•

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Business Development•

Business Services•

Corporate Affairs•

Corporate Finance•

Future Direction•

People and Change•

Safety Management•

Technology and Asset Services•

The managers of the business groups form the Executive Committee, which advises the

CEO on operational matters and is responsible for formulating strategies and policies for

Board consideration.

The members of the Executive Committee are shown in Table 1.

Mr Greg Russell Chief Executive Officer

Mr Ken McLean General Manager Air Traffic Control

Mr Stephen Angus General Manager Air Traffic Control Reform

Ms Michelle Bennetts General Manager Audit and Assurance

Mr Alan Barber General Manager Aviation Rescue and Fire Fighting

Mr Wayne Emery General Manager Business Development

Mr Neal O’Callaghan General Manager Business Services

Mr Richard Dudley General Manager Corporate Affairs

Mr Andrew Clark General Manager Corporate Finance

Mr Brian Prendergast General Manager Future Direction

Ms Caroline Fleming General Manager People and Change

Mr Jason Harfield General Manager Safety Management

Mr Alastair Hodgson General Manager Technology and Asset Services

TABle 1 MEMBERS OF THE ExECUTIVE COMMITTEE, 30 JUNE 2007

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At 30 June 2007, Airservices Australia employed 2 996 permanent staff across Australia. Our

workforce included specialists in air traffic control, aviation rescue and fire fighting, engineering,

technical services, information technology, human resource management, communications,

legal services, security, safety, environment, financial management and administration.

Appendix 4 includes staffing statistics.

FIgure 3 AIRSERVICES AUSTRALIA BUSINESS STRUCTURE AT 30 JUNE 2007

CEO

Aviation Rescue &

Fire Fighting Services

Air Traffic Control

Technology & Asset Services

Business Development

Business Services

People & Change

Corporate Affairs

Safety Management

Audit & Assurance

Corporate Finance ATC Reform

Future Direction

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airservices pacific incorporatedAirservices Pacific Incorporated, a fully owned subsidiary of Airservices Australia incorporated

in Delaware in the United States, is responsible for providing air traffic control services under

contract to the United States Federal Aviation Administration. The services are delivered from

five control towers: three towers on the islands of Hawaii, one on Guam and one on Saipan.

Airservices Pacific’s corporate governance is managed by a board comprising:

Mr Greg Russell (Chair)•

Mr Tim Abberton (CEO)•

Mr Roger Ray (formerly of the Federal Aviation Administration and based in the United States)•

Mr Ken McLean•

Mr Alan Barber (until 31 March 2007)•

Mr Andrew Clark (from 1 April 2007).•

In addition, the Board is supported by a Chief Finance Officer and company secretariat positions.

Corporate governanceAirservices Australia is governed by a Board appointed by the Minister for Transport and Regional

Services. The Board is committed to best practice in corporate governance and regularly reviews

its corporate governance arrangements.

The Board The Air Services Board consists of a Chairperson, a Deputy Chairperson, the Chief Executive

Officer and six other members (non-executive directors).

Other than the CEO, who is appointed by the Board, all members are appointed by the Minister

on a part-time basis.

The Board sets Airservices Australia’s objectives, strategies and policies, and ensures that

the corporation performs its functions properly, effectively and safely. The Board delegates

responsibility for the management of the corporation to the CEO.

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Each year, the Board conducts a formal evaluation of its own performance and the performance

of its committees.

Further information on Board membership is in Appendix 1.

Board committeesMeeting and membership information for each Board committee is shown in Appendix 1.

The Audit Committee assists the Board in ensuring that an effective system of risk management

and internal control is maintained, assures the objectivity and reliability of financial reports and

helps ensure that Airservices Australia and its Board members comply with all legislative and

other Government obligations (including obligations under the CAC Act). Membership consists

of non-executive directors. The Board Chair is an ex officio member of the committee. Any

member of the Board is entitled to attend the committee’s meetings.

The Safety and Environment (Operations) Committee ensures that Airservices is compliant with

all legislation and government and Board policies and is meeting its safety responsibilities,

environmental responsibilities (other than regulatory functions carried out through the Airspace

and Environment Regulatory Unit) and its occupational health and safety responsibilities. Its

membership consists of up to five non-executive directors and the Board Chair and CEO, who are

ex officio members. Any member of the Board is entitled to attend the committee’s meetings.

The Safety and Environment (Regulatory) Committee ensures that changes to Australian-

administered airspace and the provision of environmental regulatory services are consistent

with law and with Airservices’ regulatory responsibilities. Membership consists of up to five non-

executive directors and the Board Chair and CEO, who are ex officio members. Any member of

the Board is entitled to attend the committee’s meetings.

The Remuneration Committee recommends remuneration for the CEO after consultation with

the Remuneration Tribunal and reviews the CEO’s performance. The committee also reviews

the principles applied by the CEO in determining remuneration packages, performance reviews

for the CEO’s direct reports and CEO succession. Membership consists of the Board Chair as

committee chair, at least one other non-executive Board member and the CEO.

The Security Committee monitors the corporation’s development, implementation and auditing

of security strategies, policies and procedures. Membership consists of the Board Chair as

committee chair, two non-executive directors and the CEO. The Board Chair and CEO are ex

officio members of the committee.

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The New Business Committee considers new business proposals and reviews the commercial

integrity of proposals requiring urgent approval out of session. Where appropriate, the New

Business Committee approves the execution by the CEO of contracts in excess of the CEO’s

normal financial delegation. Membership comprises the Board Chair as committee

chair and the CEO.

ethical standardsAirservices Australia uses Board-endorsed policy, Chief Executive management instructions

and other People and Change policies and procedures to inform staff about ethical standards.

As a condition of their employment, all staff must comply with a code of conduct while at work

and as corporate representatives. The code, which includes guiding principles for handling

conflicts of interest, is available from our website.

risk managementAirservices Australia is committed to best practice risk management and sees it as integral

to excellence in corporate governance.

The organisation’s risk management policy is supported by a Board-endorsed Enterprise Risk

Management Framework that sets out the requirements for risk management throughout

the organisation.

Managers are accountable for identifying and managing risks within their areas of responsibility.

They must ensure that they are kept informed of how those risks are being managed and report

to the CEO.

The CEO reports regularly to the Board on significant risks to the organisation’s objectives

and their management. The General Manager Business Services reports to each Board Audit

Committee meeting on initiatives to maintain and improve the organisation’s risk management

system. As defined by their charters, the Board committees assist the Board to oversight the

management of specific risk areas.

Corporate planningAirservices Australia produces an annual corporate plan in accordance with the Airservices

Act and the CAC Act. The plan analyses our operating environment, outlines our corporate and

financial strategies, specifies the targets we want to achieve and sets out the benchmarks and

key performance indicators we use to measure our performance (see Figure 1).

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Our current corporate plan is available at our website:

http://www.airservicesaustralia.com/aboutus/corpdocuments/corporateplan.pdf

standards of service CharterAirservices Australia’s Standards of Service Charter establishes the standards of service that

customers can expect from us and the options available to them if they believe those standards

are not being met.

The charter is available from our offices and from our website:

http://www.airservicesaustralia.com/aboutus/corpdocuments/charter.pdf

adverse effect of non-commercial commitmentsAs reported in Note 5c of the financial statements, included in operating expenses are direct

costs of community service activities, totalling $3.8 million. The community service activities

funded by Airservices Australia last year included environmental services (a noise and flight path

monitoring system) and the operation of aircraft noise inquiry lines.

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revieW of operations

operational results

Key result area: SafetyTo maintain world-leading safety performance by keeping safety first in the efficient delivery of all

our services and by understanding and managing our risks.

To provide a more effective safety system, in 2006–07 Airservices Australia started work on

integrating the organisation’s operational and occupational safety management systems. This

integration signals our intention to approach personal safety and operational safety in a similar

manner and will lead to a simplification of our management systems.

A new safety policy was signed in 2006–07. The policy focusses on:

enhancing the skills of our people•

providing equipment that supports performance•

developing processes that facilitate our ability to identify and control risk •

This work will continue through the 2007–08 financial year.

An internally developed software system for lodging operational risks and reporting the

monitoring of results was replaced by software that allows the use of the ‘BowTie’ methodology.

The methodology helps clean analysis of risk mitigation controls that are preventative as well

as mitigators which can be deployed after an adverse event to mitigate the consequences. It

enables the development of clear relationship diagrams between risk, mitigation and control

that can be readily understood by staff throughout the organisation and by our key stakeholders.

Airservices Australia has worked with the Civil Aviation Safety Authority, the Department of

Transport and Regional Services and the Department of Defence to develop a common risk

management framework. The framework provides consistent risk principles, criteria, agreed

processes and data sources on which risk management activities are to be based. The framework

enables the agencies to increase the integrity of their risk management processes and deliver

consistency and transparency in decision making.

Airservices Australia conducted its second validation of the Normal Operations Safety Survey

technique, which uses over-the-shoulder observations to collect data on normal operations.

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The observers identify:

threats, such as similar call signs and system malfunctions•

errors, such as missed or incorrect read-backs, call-sign confusion and inadequate coordination •

undesirable states (situations with reduced safety margins) within the normal air traffic service •

operating environment

We analysed the collected data from en route, terminal area and, for the first time, tower

operations and used it to develop appropriate strategies to improve overall system safety.

We also assessed ab initio air traffic control (ATC) training strategies to determine opportunities

for improvement.

Airservices Australia worked with Indonesia’s Directorate General of Civil Aviation to develop an

approach to a subregional safety program across air navigation service providers (ANSPs). The

goal was to achieve a common approach to safety management in the the Indonesian, Timor,

Papua New Guinea and Australian regions. We delivered a successful two-day integrated safety

management system course to senior managers from the Directorate-General and the two

Indonesian ANSPs (AP1 and AP2) in Singapore in late 2006. We also facilitated a Regional Safety

Roadmap Working Group workshop in Bali and a follow-up sub-group workshop involving Papua

New Guinea, Indonesia, East Timor and Australia in Jakarta in June 2007.

Safety accountabilities are a standard component of role statements for staff. During the year,

165 newly implemented role statements were approved or were in the process of being

approved. All included clearly outlined safety accountabilities.

The corporation updated the ‘Just Culture’ program, which provides a standardised classification

mechanism for behaviours involved in events leading to an undesirable safety outcome

and a policy statement was issued by the executive. Just Culture aims to ensure common

understanding within the organisation of the line between acceptable and unacceptable

behaviour. The policy standardises managerial decision making, providing fair and equitable

means of dealing with those who have been involved in a negative safety event. Managers

across the organisation were required to brief their staff on the implications of the policy.

Workshops were held with non-operational business groups to develop a greater understanding of

their indirect role in the organisation’s safety performance. Action plans were developed at individual

and group levels to strengthen understanding of safety management processes and values.

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New safety promotion folders, entitled ‘Safety Matters’, were distributed to all staff in

operational and technical areas. The folders give staff easier access to a wide range of safety

information, including:

lessons learned from incident investigations •

news and information about relevant safety issues •

outcomes of safety audits •

developments from across the world on relevant safety issues •

safety statistics, including information on the safety outcome key performance indicators •

and safety profile activity

occupational health and safety alerts and lessons learnt•

The folders were complemented by promotional posters and monthly feedback on

safety performance.

All managers have completed refresher training through the online safety and environment

training package. Airservices Australia staff also ran safety management courses in Taiwan,

Hong Kong, Malaysia and Saudi Arabia.

Key performance indicators: SafetyAirservices Australia has a very comprehensive approach to safety management and

measurement. Our safety key performance indicators (KPIs) are structured into three groups:

outcomes, profile and initiatives. Headline metrics relate to safety outcomes with measures

being captured for the three major services that we provide: air traffic control, aviation rescue

and fire fighting and technology and asset services.

Our safety KPIs are supported by performance measures that aim to place the ‘headline’

into context by measuring safety profile factors, such as compliance with safety regulations,

safety culture metrics and service restoration times. The underlying rationale is that

concentrating solely on negative safety outcomes does not provide a suitable context for

improving performance.

We also measure the number of safety initiatives implemented, although no target is assigned.

Such measures indicate how much effort has been exerted to improve the safety profile and

positively influence safety outcomes.

27

FIgure 4 STRUCTURE OF AIRSERVICES AUSTRALIA’S SAFETY KPIs

The scheme for ATC incident categorisation is based on a four-level safety severity incident (SSI)

index, as shown in Table 2

TABle 2 SAFETY SEVERITY INCIDENT CLASSIFICATION

Level of control resolved by (barrier)

Definition Incident classification

Providence Errors that either were not captured at all or were identified by airborne system defences, such as ground proximity warning systems or traffic collision advisory systems.

SSI 1

Pilot/other industry participants

ATC errors that were detected by pilots or other industry participants. SSI 2

Air Traffic Services, but not effectively

ATC errors that were identified and rectified by ATC but not in an effective or efficient manner. SSI 3

Air Traffic Services Errors that were both identified and rectified in an appropriate manner by the ATS system. SSI 4

Safety outcomes

Safety initiatives

Safety profile

The targets for 2006–07 and out years are based on performance in 2004–05 for SSI 1 and a

combined category of SSI 2 and SSI 3. The Board has deliberately set targets which are very

demanding, recognising that increasing traffic flow and consequent risk complexity would

make it difficult to achieve them. Nonetheless, they remain the targets to strive for.

28

During 2006–07, Airservices Australia:

did not meet the zero target for SSI 1 occurrences•

exceeded the target in general aviation aerodrome procedures towers (Figure 5)•

did not meet the target in the radar tower and en route segments (Figures 5 and 6)•

missed the target by a very marginal degree in the regional towers and terminal manoeuvring •

area segments (Figure 7)

met the requirement for no critical infrastructure failures•

exceeded requirements for containing both aircraft and structural fires to the area of origin•

Four SSI 1 incidents were reported, the same number as in 2004–05 and 2005–06. As noted

above, we did not expect this performance standard to be achieved. However, the zero target

provides an impetus for improvement. A high-level safety strategy has been endorsed to provide

a framework within which the organisation can work to eliminate such high-risk occurrences.

The minor underperformance in the radar tower and en route segments has been investigated,

but no pattern or systemic problem is evident from the range of incidents. However, we have

identified a need for less reliance on procedural barriers to error and for more effective error

recovery. A remedial program and a new design philosophy are now being used in operations.

29

FIgure 5 TOWER SEGMENTS: TARGETS AND PERFORMANCE FOR SSI 2 AND SSI 3 INCIDENTS

Actual

Target

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

2007

–08

2006

–07

2005

–06

2004

–05

2007

–08

2006

–07

2005

–06

2004

–05

2007

–08

2006

–07

2005

–06

2004

–05

General Aviation Aerodrome Procedures tower

Regional tower Radar tower

Inci

dent

s pe

r 100

,000

mov

emen

ts

FIgure 6 EN ROUTE SEGMENTS: TARGETS AND PERFORMANCE FOR SSI 2 AND SSI 3 INCIDENTS

Actual

Target

Transitional Continental/Oceanic

Inci

dent

s pe

r 100

,000

mov

emen

ts

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

Inci

dent

s pe

r 100

,000

flig

ht h

ours

2007

–08

2006

–07

2005

–06

2004

–05

2007

–08

2006

–07

2005

–06

2004

–05

30

FIgure 7 TERMINAL MANOEUVRING AREA SEGMENT: TARGETS AND PERFORMANCE FOR SSI 2 AND SSI 3 INCIDENTS

Actual

Target

Inci

dent

s pe

r 100

,000

flig

ht h

ours

0.0

0.5

1.0

1.5

2.0

2.5

2007–082006–072005–062004–05

The organisation met, and in some cases exceeded, targets associated with safety profile

measures. These measures included:

Safety Culture Index: an employee-based opinion survey•

no late for completion requests for corrective action issued by our safety regulator•

percentage of occasions on which agreed times for service restoration were met•

target level of safety for reduced vertical separation minima operations•

ARFF incident response and completion times for aircraft and non-aircraft occurrences•

ARFF effectiveness measured by the time each station was available at the required category •

of readiness

Key result area: environmentTo foster best practice environmental performance through sustainable business practices

In 2006–07, Airservices Australia undertook a range of operational initiatives and arrangements

to reduce the level of aviation-related greenhouse gas emissions, including the following:

Pre-departure tactical management• . This initiative manages the timing of flight departures

better by taking into account all factors affecting the air traffic network.

31

Long-range Optimal Flow Tool• . This air traffic management tool is used to predict landing times,

delays and optimal arrival times for aircraft arriving in Sydney, the national aviation hub. Air

traffic controllers pass information to pilots as they cross into Australian airspace, some three

to four hours away from Sydney, and pilots then adjust their cruise speed to reduce delays in

Sydney. This reduces fuel burn and emissions, as aircraft burn less fuel at high altitudes than at

low altitudes.

Continuous descent approaches• . This trial program, in conjunction with Boeing, allows aircraft

to fly a continuous and uninterrupted descent, at idle power, from cruise altitude to the

runway. These approaches reduce the amount of fuel burn and emissions, with early results

showing a saving of more than 1 000 kilograms of CO2 per flight.

Required navigation performance (RNP) procedures• . Airservices introduced new approach

procedures to take advantage of the high-precision navigation systems now being fitted to

aircraft. RNP procedures use satellite navigation and sophisticated cockpit systems to avoid

terrain and weather constraints, increase fuel efficiency and considerably reduce greenhouse

gas emissions. During trials in Brisbane in early 2007, each flight saved an average of 280

kilograms of fuel and about 900 kilograms of CO2. RNP approaches and departures were

introduced for suitably equipped aircraft at Alice Springs, Cairns, Coolangatta, Brisbane, Hobart,

Townsville, Canberra and Ayers Rock.

Flextracks• . Flextracks (‘flexible tracks’) are daily ‘non-fixed’ air traffic routes optimised for the

prevailing weather. They allow aircraft to ‘ride’ the winds rather than fly a fixed route. Airservices

Australia’s flextracks were used widely throughout the year between Australia and airports

in Asia and the Middle East. For example, one flight between the Middle East and Sydney

reduced flying time by more than 43 minutes and fuel burn by more than 8.4 tonnes.

High-fidelity simulation of aviation emissions• . Airservices Australia began work with the

University of New South Wales to develop ATOMS (Air Traffic Operations Management

Simulator), a high-fidelity computer simulation to model the environmental impact of aviation.

The simulation will model current impacts and quantify improvements from advanced air

traffic management techniques. Quantitative analysis will be crucial to Airservices’ work with

industry and government to improve the environmental performance of Australian aviation.

In conjunction with the Civil Aviation Safety Authority (CASA), Qantas and Sydney Airport

Corporation Ltd, we introduced a satellite-based precision approach system into Sydney

International Airport for trial purposes. Qantas, which used Boeing B737–800s to land,

demonstrated significant fuel savings.

32

Airservices Australia provides monthly reports to the Department of Transport and Regional

Services (DOTARS) on curfew operations and compliance with the Sydney Airport Curfew Act 1995

and associated regulations. After discussions with DOTARS in 2006, we agreed to changes from

January 2007 in the way the curfew data is analysed and presented in the reports. The revised

format aligns the reports more closely with regulatory provisions, making non-compliances more

explicit. The changes were also applied to the reports on curfew operations at Adelaide and

Coolangatta airports.

The Australian National Audit Office audited the Sydney Airport Demand Management Act 1997 in

March 2007. The audit included Airservices Australia’s role in monitoring the implementation and

administration of the movement limit and slot management scheme at the airport. While none

of the audit recommendations specifically referred to Airservices Australia, improvements have

been made to our data management and other process controls.

To manage Airservices Australia’s environmental impacts and business risks, 93 proposed

air traffic control changes, 15 proposed changes to ground-based operations and 39 current

ground-based operations were recorded in our risk management system for environmental

risk assessments.

We conducted environmental audits at sites across Australia and audits of our environmental

management system (EMS) at Canberra, Coolangatta and Melbourne airports. We completed

a review of contaminated sites and established a register that identified 67 sites with

contamination problems, nine of which were rated ‘high risk’. In line with our philosophy of

continuous improvement, an environmental management procedures reference document

was developed for all project managers.

Airservices Australia’s corporate EMS, which is aligned to ISO 14001, was upgraded to reflect

the organisation’s new structure. We substantially improved the environmental legal and other

requirements register.

In January 2007, Airservices Australia’s EMS for ground-based operations at Gold Coast Airport

was certified under ISO 14001. In May and June 2007, our EMSs at certified sites were subjected

to a triennial ISO 14001 recertification audit. The recertification provides a positive incentive for

seeking certification of further sites in 2007–08.

Sixteen environmental incidents and two non-conformances were reported during the year.

We took appropriate preventive or corrective action for each incident. Most incidents were rated

33

as minor to insignificant; only a small number, involving spills of small quantities of fuel or fire

fighting agent, were rated as having moderate consequences.

More than 110 Airservices staff were given environmental training and more than 650 completed

the online environment module of the safety and environment training package. About 2 400

personnel completed the environment module of Airservices Australia’s online legal compliance

training package. Project managers undertook two-day environmental training courses in

Brisbane, Canberra and Melbourne.

In line with the Australian Government’s 2004 decision to remove all regulatory functions from

Airservices Australia, 2006–07 was the final year of operation of the Airspace and Environment

Regulatory Unit (AERU) within the corporation. On 1 July 2007, airspace regulatory functions

under the Air Services Regulations Part 2 were transferred to the Office of Airspace Regulation

at CASA. Some environmental functions previously undertaken by AERU will remain with

Airservices, including the operation of the Noise Enquiry Unit, wake turbulence investigations,

aircraft noise levy collection, aircraft noise certificates and the technical endorsement of

Australian Noise Exposure Forecasts and Indexes.

In addition to preparing for the transfer of regulatory functions, AERU assessed 142 airspace

change proposals for safety and environmental impact during the year, up from 79 in 2005–06.

The increase was mostly due to AERU taking on board all the short-term airspace changes that

were previously dealt with by our operations centres in Brisbane and Melbourne.

For further details of our work to protect the environment, see ‘Environmental protection and

ecologically sustainable development’ in Appendix 2.

Key performance indicators: EnvironmentA key environmental performance indicator measures the numbers of environmental legal non-

compliances and significant environmental risks not fully managed

Table 3 shows our performance over the past three financial years.

34

TABle 3 MANAGEMENT OF ENVIRONMENTAL LEGAL NON-COMPLIANCE AND SIGNIFICANT ENVIRONMENTAL

RISKS 2004–05 TO 2006–07

Year Item Actual Target

2004–05 Environmental legal non-compliances 0.0 0.0

Significant environmental risks not fully managed 0.0 2.0





Another key performance indicator measures performance against the Sydney Airport Long

Term Operating Plan, which includes noise-sharing principles. Plan targets are shown in Figure 8,

and reflect achievements as close to targets as practicable, given traffic management, weather,

and forecast and prevailing wind conditions.

Performance in 2006–07, measured as percentages of actual runway end movements, was above

plan targets for the north and east and below for the south and west.

FIgure 8 SYDNEY AIRPORT LONG TERM OPERATING PLAN: RUNWAY END IMPACTS, JULY 2006 TO JUNE 2007

Achieved

Target

0%

10%

20%

30%

40%

50%

60%

WestEastSouthNorth

35

Key result area: Operational excellenceTo achieve sustainable competitive advantage through customer focussed and efficient processes and

systems and leadership in innovation

Airservices Australia commenced the redesign of Australian airspace into the service delivery

environment (SDE), with the first significant changes in June 2007. The SDE project—to be

implemented nationally over the next three years—seeks to enhance the safety and efficiency

of air traffic management operations with flow-on benefits to industry customers, stakeholders,

staff and the corporation.

The project will enhance safety and efficiency through a national rather than a geographic

approach to service delivery, national system management, national resourcing and national

procedures and standardisation.

Service delivery focusses on:

Upper airspace• : fixed and user preferred routes over continental Australia and in oceanic

airspace (not airport operations)

Regional• : regional towers and user-defined operations involving all Class D and Class C control

towers and all classes of regional airspace below flight level 28,500 feet (continental) and flight

level 24,500 feet (along the east coast)

East coast services• : ‘gate to gate’ operations into major city airports, including regional and

long-haul traffic

In March 2007, we implemented the first round of changes to the air traffic control (ATC)

management structure to support the move to an SDE. The restructure reduced the layers of

management to ensure greater accountability, better management and communication and

improved staff engagement.

The International Civil Aviation Organization (ICAO) Asia Pacific Regional ADS–B Task Force made

recommendations on Automatic Dependent Surveillance–Broadcast (ADS–B) data sharing and

ADS–B deployment. Airservices Australia maintained leadership in ADS–B, global navigation

satellite systems and required navigation performance standards development at a global level

through our chairmanship of key ICAO working groups and task forces.

Airservices ordered 20 more ground stations to be placed at en route radar sites around Australia

to progress the implementation of ADS-B aircraft tracking in upper airspace.

36

A Ground-based Augmentation System (GBAS) landing trial for appropriately equipped Qantas

aircraft was introduced at Sydney International airport.

In early 2007, the trial of new information delivery mechanisms commenced for regional and

general aviation towers. This screen-based technology improves the ability of controllers to

access flight and weather information.

We implemented a terminal operations reporting system to ensure consistent daily reporting of

aerodrome and terminal area performance for Brisbane, Melbourne, Sydney, Cairns, Adelaide and

Perth. The extension of this reporting into en route environments is under consideration.

Development and production of a national airport performance report has introduced reporting

of airborne delay, airport capacity and demand in real time. This reporting structure provides a

continuous improvement strategy for operational terminal management.

Airservices developed and produced a Tower–Terminal Control Unit Integration Plan for Adelaide,

Perth, Melbourne, Sydney, Brisbane and Cairns terminals. The plan is a roadmap for structural

enhancements to operations.

In March 2007, the Parliamentary Standing Committee on Public Works held a public hearing

on Airservices Australia’s national towers program proposal. The committee’s report was

approved by Parliament in June. Stage 1 of the program involves replacing ATC towers at

Adelaide, Canberra, Melbourne and Rockhampton. With a design contract to be let in late 2007,

construction work is expected to be completed by 2010.

Airservices Australia chaired the Capacity and Service Improvement Forum of the Australian

Strategic Air Traffic Management Group and its National Cross Industry Working Group. This

group comprises of key industry stakeholders, including Airservices Australia, Qantas, Jetstar,

Virgin, Regional Express, Brisbane Airport Corporation, Sydney Airport Corporation Ltd and

Melbourne International Airport. The working group meets every three months to discuss and

report on matters of operational significance to the aviation industry, to identify key issues that

affect gate-to-gate trajectory optimisation and to work on strategies to optimise services.

A new Aviation Rescue and Fire Fighting (ARFF) station at Hamilton Island airport was officially

opened in March 2007 by the Parliamentary Secretary to the Deputy Prime Minister and Minister

for Transport and Regional Services, Mrs De-Anne Kelly.

37

The ARFF vehicle modernisation program continued with three new fire vehicles placed at

airports around Australia and 20 more ordered for delivery over three years to standardise

the fleet. Two new Domestic Response Vehicles were positioned in Sydney and Melbourne.

We extended our subscription to Greenfleet nationally to plant 56 trees to offset greenhouse

gas emissions for each ARFF fire truck in the fleet and commenced a national digital radio

replacement program at all stations for completion by mid-2008.

Coolangatta airport fire station was granted ISO 14001 certification recognising its sound

environmental management systems. Work continues on certification for all ARFF locations

in 2007–08.

Key performance indicators: Operational excellenceIn 2006–07, Airservices used three main key performance indicators to measure operational excellence

Aviation rescue and fire fighting operational preparedness was measured by the ability

to provide required levels of services, as determined by CASA regulations. The target was

100 per cent and actual was 99.78 per cent.

The effectiveness of corrective maintenance of airways system equipment was measured as a

percentage of restoration times met. Airservices has met the target of 95 per cent since it was set

in 2003–04.

The numbers of service failure notifications (incidents significant enough to require remedial

attention) for air traffic management facilities indicate system performance in three categories:

Category 1 events involve a loss of life (we have always achieved our target of zero); Category

2 events are those that could have led to a loss of life (target zero, exceeded only once); and

Category 3 events have other potentially serious operational consequences. All notifications are

investigated and appropriate corrective action is taken. In 2006–07, there were eight Category 3

notifications.

38

FIgure 9 AVIATION RESCUE AND FIRE FIGHTING OPERATIONAL PREPAREDNESS, PER CENT

95%

96%

97%

98%

99%

100%

Jun-07May-07Apr-07Mar-07Feb-07Jan-07

FIgure 10 CORRECTIVE MAINTENANCE:RESTORATION TIMES MET, PER CENT

0%

20%

40%

60%

80%

100%

2006–072005–062004–052003–04

Actual

Target

0

5

10

15

20

25

30

2006–072005–062004–052003–042002–03

Actual

Target

FIgure 11 SERVICE FAILURE NOTIFICATIONS, CATEGORY 3

39

Key result area: Customers and marketsTo maximise our domestic market share and extend international market reach in our core businesses

by delivering superior customer value

Airservices Australia continued to strengthen its international commercial relationships

during 2006–07.

Highlights included the opening of a representative office in Dubai, the delivery of consultancy

and contract management services in air traffic, safety and aviation rescue and fire fighting

(ARFF) in the Gulf, India and China and safety and training projects in Indonesia and Papua New

Guinea (PNG).

Airservices continued to work closely with DOTARS, the Department of Foreign Affairs and Trade,

AusAID and Austrade to build relationships with Indonesia and PNG in the development of

aviation safety and systems. Recent cooperation between the organisations has resulted in a

new $24 million aviation and maritime safety program with Indonesia.

We played the key role in supporting an Indonesian regional ADS–B trial based on the

deployment of three ground stations at strategic locations covering busy air routes. The trial

demonstrated the benefits of sharing electronic surveillance data across Flight Information

Region boundaries to enhance safety.

We also developed improvements to Indonesia’s Makassar Advanced Air Traffic System, assisted

the Indonesian Government with its implementation and provided the first of a number of

Indonesian air traffic control radar and data-link training courses in our Brisbane centre in

June 2007.

Airservices and the PNG Civil Aviation Authority signed terms of reference to work together to

accelerate the deployment of ADS–B in PNG based on a ‘managed service’ acquisition approach.

The first site is expected to be operational at Port Moresby by October 2007. PNG will be given

access to surveillance data from the Airservices ADS–B site at Thursday Island by December 2007.

Training for PNG en route personnel began at our Melbourne Training College in June 2007.

In other training work during the year, we completed the delivery of six aviation English training

courses to Chinese air traffic controllers in conjunction with the Royal Melbourne Institute

of Technology and began area tower training for Bahrain operators at the Melbourne

Training College.

40

A commercial management process has been implemented, providing improved tracking of

commercial proposals and bids, opportunity qualification and risk management assessment.

Business processes for developing our domestic and international commercial operations are

underway. We have identified opportunities for consultancy and service provision in the Persian

Gulf and India, to be pursued in 2007–08.

Further work planned for 2007–08 includes the following:

Initial meetings to develop memoranda of communications with the Philippines and Malaysia •

for regional cooperation on aviation safety and operations are to be held in December 2007.

We expect to sign the memorandums by June 2008.

We will establish Airservices Australia representative and branch offices in Singapore by •

September 2007 and in India by December 2007, respectively.

We will develop and begin the implementation of an engagement strategy for the •

International Civil Aviation Organization, especially in Southeast Asia. This will include work

on the regional safety roadmap and seamless airspace concepts.

Key performance indicators: Customers and marketsIn 2006–07, Airservices outcome for other commercial revenue (non-monopoly) revenue was

$34.44 million, which was consistent with the 2005–06 year.

0

5

10

15

20

25

30

35

2006–20072005–062004–052003–042002–032001–02

mill

ions

FIgure 12 COMMERCIAL (NON-MONOPOLY) REVENUE, 2001–02 TO 2006–07

41

Key result area: employeesTo achieve a skilled, motivated, flexible and customer focussed workforce committed to continuous

improvement, innovation and growth in our business

In early 2007, Airservices Australia centralised support for human resources by removing the

human resource function in Brisbane and Melbourne to consolidate the People and Change

business group in Canberra. Relationship managers support all business groups, with a team

of specialists advising on such matters as recruitment, workplace relations, senior management

remuneration, relocations and human resource procedures.

The national recruitment unit relocated from Melbourne to Canberra in March 2007 to work

more closely with other People and Change staff and have a greater understanding of strategic

business plans and objectives.

We have progressively centralised training to achieve greater integration and higher efficiency

and to improve our oversight of training standards, curriculum design, learning needs and

innovation in training delivery methods.

The air traffic control (ATC) restructure during the year, which focussed on the delivery of

core business, included the centralisation of human resources functions and a strategic

national approach to improving people management. This has resulted in a more streamlined

approach to human resources management. The restructure also streamlined job roles and

accountabilities, based on a leadership capability model, resulting in improvements and

efficiencies in training. Changes in technology will accelerate this trend.

To adjunct existing recruitment programs, in May and June 2007, Airservices Australia ran

a global recruitment program for 30 additional experienced air traffic controllers.

Airservices Australia has adopted succession planning principles and processes and created

a general manager succession pool. Work began on the development of an air traffic controller

career model, to be introduced in 2007–08, which will improve staff development and

succession planning.

In order to attract and retain a flexible, high-performance workforce, we have encouraged the

use of individual Australian Workplace Agreements (AWAs). A new, more flexible approach to

AWAs allows managers and employees to select from a number of clause options tailored to their

circumstances and business needs.

42

For staff under certified agreements, we continued to use facilitative arrangements to allow

individuals and groups of employees and their managers to tailor working arrangements to suit

local conditions.

The ATC reform process included the creation of ATC line manager positions offered either on

an AWA basis or within a collective framework negotiated directly with the corporation.

Recognising the importance of leadership, Airservices Australia introduced a ‘Leaders Leading’

program. Activities in 2006–07 included:

three-day workshops for around 310 managers•

three-day ‘train the trainer’ workshops for ATC Level 3 managers•

overview and teamwork sessions at the request of managers•

Key performance indicators: EmployeesAirservices Australia measures and reports on the level of employees’ engagement with

their work. The employee engagement index is determined from our annual employee

opinion survey.

Results for 2006–07 showed a significant increase in employees’ engagement (with their job

and the organisation), from 29 per cent in 2005–06 to 45 per cent in 2006–07. This figure is above

the average Australian benchmark of 31 per cent and exceeds the target of 37 per cent set for

2006–07.

Key result area: OwnerTo meet the government’s requirements for financial returns, increasing value in the business and

maintaining positive relationships with key industry, regulatory and community groups

During 2006–07, the corporation achieved the required rate of return, approved by the Australian

Competition and Consumer Commission on a rolling five-year basis and taking into account

unfunded community service obligations and government-required initiatives.

To improve our risk management control and reporting system and to ensure that all significant

risks are identified and managed, we developed and obtained Board endorsement of an

Enterprise Risk Management Framework, implemented in December 2006.

43

In March 2007, the Minister issued a Statement of Expectations to the Board in accordance with

the requirements of the Uhrig review of corporate governance. The Board is committed

to meeting the Minister’s expectations and has responded with a Statement of Intent.

During the year, there was heavy focus on transition of the airspace regulatory functions to CASA,

which took place on 1 July 2007. Airservices will continue to work closely with CASA on airspace

and other regulatory issues.

Building stakeholder relationships continues to be a key focus for Airservices Australia and we

actively participated in industry and other stakeholder forums during the year.

Key performance indicators: OwnerIn 2006–07, earnings before interest and tax as a percentage of revenue increased to 22 per cent,

from 20 per cent in 2005–06. This is due mainly to growth in airways activity.

0%

5%

10%

15%

20%

25%

2006–072005–062004–052003–042002–03

ministerial directionsDuring 2006–07, the minister made no new formal directions to Airservices Australia under section

16 of the Air Services Act 1995. Current directions from previous years are at table 6 page 120.

stakeholder involvement and consultationDuring 2006–07, Airservices Australia consulted widely with stakeholders in Australia and

overseas. Consultations took place with governments, airline operators, aerodrome operators,

regulators, general aviation operators, corporation staff and the community. New stakeholder

management positions were created to improve interaction and consultation with airlines,

airports, government agencies and the public.

FIgure 13 EARNINGS BEFORE INTEREST & TAx, PERCENTAGE OF REVENUE, 2002–03 TO 2006–07

44

financial resultsAirservices Australia’s 2006–07 after-tax return on average equity of 30.4 per cent, above the

25.3 per cent target provided for in the Corporate Plan 2006–2011, was achieved largely through

increased airways activity leading to revenue growth exceeding higher costs. Operating profit

after tax increased by 14.1 per cent compared to last year’s result, rising to $106.8 million.

During the year, the corporation paid the government $65.3 million in dividends.

IncomeTotal income for the year was $728.7 million, compared to $683.5 million in the previous year.

Airways revenue grew by 5.2 per cent across the year, with net sales of $676.7 million.

A revaluation of our property, plant and equipment resulted in $12.1 million being recorded

as revenue, as required under applicable accounting standards.

expensesOverall expenses increased by $27.6 million compared to 2005–06. Employee costs increased

by $12.1 million, mainly due to the booking of significant provisions for eligible termination

payments related to planned restructure initiatives. There was also an increase in our supplier

expenses of $13.8 million, mainly related to external costs for capital projects being written off

after cancellation of a supplier’s contract and reclassification of costs previously included in

employee expenses.

significant changes in the state of affairs during the financial year

Changes to legislationThe Airports Act 1996 was amended in 2006–07 to prevent the provision of air traffic services and

rescue and fire fighting services at airports without the approval of the Civil Aviation Safety Authority.

No other legislative changes during 2006–07 had an effect on the operations of the corporation.

regulatory changesThe Civil Aviation Safety Authority took over responsibilities for assessing and managing airspace

change proposals through the Office of Airspace Regulation on 1 July 2007. These functions were

previously carried out by Airservices Australia. There were no other regulatory changes during

the year that affected our operations.

Developments since the end of the financial yearNo developments since the end of the financial year are likely to affect the future operations

of Airservices Australia.

45

Financial Statements For the year ended June 2007

46

Financial statementsFor the year ended 30 June 2007

47


48


49

Notes2007

$'0002006

$'000

CONTINUING OPERATIONS

INCOME

Airways revenues 5b 676,659 643,388

Finance income 5a 633 2,384

Other commercial revenue 5b 34,442 34,415

Miscellaneous income 5b 4,868 831

Total Revenue 716,602 681,018

Gains

Reversal of previous asset write-downs 5b 12,106 2,442

Total Gains 12,106 2,442

TOTAL INCOME 728,708 683,460

EXPENSES

Employee expenses 5a 395,776 383,666

Suppliers 118,010 104,217

Depreciation 13 39,850 42,768

Amortisation 14 12,258 10,300

Finance costs 5a 8,914 6,371

Net loss on disposal of assets 5a 592 442

TOTAL EXPENSES 575,400 547,764

PROFIT BEFORE INCOME TAX 153,308 135,696

Income tax expense 6 46,554 42,100

NET PROFIT AFTER INCOME TAX 106,754 93,596

For the year ended 30 June 2007Consolidated Income Statement

50

As at 30 June 2007Consolidated Balance Sheet

Notes2007

$'0002006

$'000

CURRENT ASSETS

Cash and cash equivalents 9 8,874 25,874

Trade and other receivables 10 76,185 74,180

Prepayments 9,195 2,846

Inventories 360 65

Assets classified as held for sale 11 655 816

TOTAL CURRENT ASSETS 95,269 103,781

NON-CURRENT ASSETS

Land and buildings 13 159,616 137,887

Infrastructure, plant and equipment 13 352,379 300,700

Intangible Assets 14 56,910 54,350

Defined benefit fund asset 17 111,144 77,988

Deferred tax assets 12 9,934 32,104

TOTAL NON-CURRENT ASSETS 689,983 603,029

TOTAL ASSETS 785,252 706,810

CURRENT LIABILITIES

Trade and other payables 15a 91,636 104,181

Provisions 15a 116,049 132,918

Interest bearing loans and borrowings 16 44,884 100,020

TOTAL CURRENT LIABILITIES 252,569 337,119

NON-CURRENT LIABILITIES

Interest bearing loans and borrowings 16 99,409 -

Provisions 15b 48,262 51,703

TOTAL NON-CURRENT LIABILITIES 147,671 51,703

TOTAL LIABILITIES 400,240 388,822

NET ASSETS 385,012 317,988

SHAREHOLDER'S EQUITY

Contributed equity 222,190 222,190

Reserves 18a 49,303 39,633

Retained earnings 18b 113,519 56,165

TOTAL EQUITY 385,012 317,988

51

For the year ended 30 June 2007Consolidated Cash Flow Statement

Notes2007

$'0002006

$'000

CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from customers (inclusive of goods and services tax) 770,825 753,024

Payments to suppliers and employees (inclusive of goods and services tax) (604,132) (586,201)

Borrowing costs (7,507) (6,415)

Income tax paid (40,802) (38,996)

Net cash flows from operating activities 28 118,384 121,412

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from sale of property, plant and equipment 3,688 4,309

Purchase of property, plant and equipment (118,603) (102,000)

Purchase of intangible assets - (38)

Interest received 747 1,759

Net cash flows used in investing activities (114,168) (95,970)

CASH FLOWS FROM FINANCING ACTIVITIES

Dividends paid (65,300) (43,100)

Proceeds from borrowing 144,084 -

Re-payment of borrowing (100,000) -

Net cash flows used in financing activities (21,216) (43,100)

Net increase/ (decrease) in cash and cash equivalents (17,000) (17,658)

Cash and cash equivalents at beginning of period 25,874 43,532

CASH AND CASH EQUIVALENTS AT END OF PERIOD 9 8,874 25,874

52

Notes2007

$'0002006

$'000

NET INCOME RECOGNISED DIRECTLY IN EQUITY (NET OF DEFERRED TAX)

Current year net revaluation 18a 12,237 (80)

Foreign exchange hedge 18a (2,098) (9)

Exchange difference on translation of foreign opereations 18a (5) 30

Actuarial gains/losses 18b 15,436 40,882

TOTAL NET INCOME RECOGNISED DIRECTLY IN EQUITY 25,570 40,823

Profit for the year 106,754 93,596

TOTAL RECOGNISED INCOME & EXPENSES FOR THE YEAR 132,324 134,419

Consolidated Statement of Recognised Income & ExpensesAs at 30 June 2007

53

2007$'000

2006$'000

COMMITMENTS

CAPITAL COMMITMENTS

Infrastructure, plant and equipment 83,380 113,882

83,380 113,882

OTHER COMMITMENTS

Operating leases 72,638 105,522

Other commitments 45,683 29,893

118,321 135,415

COMMITMENTS RECEIVABLE (18,457) (24,818)

TOTAL NET COMMITMENTS 183,244 224,479

CAPITAL COMMITMENTS BY MATURITY

Within one year 48,263 81,920

After one year but no more than five years 27,656 31,962

More than five years 7,461 -

TOTAL CAPITAL COMMITMENTS 83,380 113,882

OPERATING LEASES BY MATURITY


After one year but not more than five years 26,142 52,347

More than five years 31,700 34,927

TOTAL OPERATING LEASES 72,638 105,522

OTHER COMMITMENTS BY MATURITY


After one year but not more than five years 23,152 14,133

More than five years 1,433 1,118

TOTAL OTHER COMMITMENTS 45,683 29,893

COMMITMENTS RECEIVABLE BY MATURITY

Within one year (7,846) (11,338)

After one year but not more than five years (8,639) (11,536)

More than five years (1,972) (1,944)

TOTAL COMMITMENTS RECEIVABLE (18,457) (24,818)

NB: Commitments are GST inclusive where relevant.

Operating leases are effectively non-cancellable and comprise:

Nature of lease General description of leasing arrangement

Leases for office accommodation

Airservices Australia Group leases are subject to differing review mechanisms which can include fixed increases every two years. The initial periods of office accommodation leases are still current and each may be renewed depending on their individual option periods.

Leases for computer equipment

A number of operating leases for the provision of computer equipment are in place. A majority of these items have a lease term of 2 to 3 years, with some printers having a lease term of up to 5 years. It is Airservices Australia Group’s general practice that at the completion of the lease term, these items are returned to the lessor.

No contingent rentals exist.

Consolidated Schedule of CommitmentsAs at 30 June 2007

55

Note 1 Summary of significant accounting policies 56

Note 2 Financial risk management 70

Note 3 Significant accounting estimates and assumptions 71

Note 4 Segment reporting 71

Note 5 Profit from continuing operations 72

Note 6 Income tax 76

Note 7 Dividends 76

Note 8 Investments in controlled entities 77

Note 9 Current assets – Cash and cash equivalents 78

Note 10 Current assets – Trade and other receivables 78

Note 11 Assets classified as held for sale 78

Note 12 Non current assets – Deferred tax assets 79

Note 13 Non current assets – Property, plant and equipment 80

Note 14 Non current assets – Intangible assets (software) 82

Note 15 Provisions and payables 83

Note 16 Interest bearing loans and borrowings 85

Note 17 Defined benefit fund asset 86

Note 18 Reserves & Retained earnings 91

Note 19 Contingencies 91

Note 20 Standby arrangements and unused credit facilities 92

Note 21 Remuneration of auditors 92

Note 22 Remuneration of directors 93

Note 23 Remuneration of executives 93

Note 24 Related party transactions 94

Note 25 Financial instruments 96

Note 26 Monies held on behalf of third parties 100

Note 27 Economic dependency 100

Note 28 Notes to the statement of cash flows 101

Note 29 Cross border financing arrangement 102

Contents of the notes to the financial statements

56

1 summarY of siGnifiCant aCCountinG poLiCiesThe principal accounting policies adopted in the preparation of the financial report are set out

below. These policies have been consistently applied to all reporting years presented, unless

otherwise stated. All amounts are shown in thousands of dollars and are expressed in Australian

dollars, unless disclosure of the full amount is specifically required.

a. Basis of preparationThe financial report is required by clause 1(b) of Schedule 1 to the Commonwealth Authorities

and Companies Act 1997 and is a general purpose financial report. The report has been prepared

in accordance with Australian equivalents to International Financial Reporting Standards

(AIFRS), Finance Minister’s Orders (being the Commonwealth Authorities and Companies

Orders (Financial Statements for reporting periods ending on or after 1 July 2006)), and other

authoritative pronouncements and Accounting Interpretations issued by the Australian

Accounting Standards Board.

Compliance with International Financial reporting Standards (IFrS)Australian Accounting Standards include Australian equivalents to IFRS (AIFRS). Compliance with

AIFRS ensures that the consolidated financial statements and notes of Airservices Australia Group

thereto comply with IFRS.

New accounting standards and interpretationsCertain new accounting standards and interpretations have been published that are not

mandatory for 30 June 2007 reporting periods. Airservices Australia Group's assessment

of the impact of these new standards and interpretations is set out below.

(i) AASB 7 Financial Instruments: Disclosures and AASB 2005-10 Amendments to Australian Accounting Standards [AASB 132, AASB 101, AASB 114, AASB 117, AASB 133, AASB 139, AASB 1, AASB 4, AASB 1023 & AASB 1038].AASB 7 and AASB 2005–10 are applicable to annual reporting periods beginning on or after

1 January 2007. Airservices Australia Group has not adopted the standards early. Application

of the standards will not affect any of the amounts recognised in the financial statements,

but will impact the type of information disclosed in relation to the Airservices Australia Groups

financial instruments.

Notes to the financial statementsFor the year ended 30 June 2007

57

(ii) AASB-1 10 Interim Financial reporting and ImpairmentAASB-1 10 is applicable to reporting periods commencing on or after 1 November 2006.

The Group has not recognised an impairment loss in relation to financial assets carried at cost

in an interim reporting period but subsequently reversed the impairment loss in the annual

report. Application of the interpretation will therefore have no impact on the Group's

financial statements.

Historical cost conventionThese financial statements have been prepared under the historical cost convention, as modified

by the revaluation of financial assets and liabilities at fair value and certain classes of property,

plant and equipment.

Significant accounting estimatesThe preparation of financial statements in conformity with AIFRS requires the use of certain

critical accounting estimates. It also requires management to exercise its judgement in the

process of applying the Group’s accounting policies. The areas involving a higher degree of

judgement or complexity, or areas where assumptions and estimates are significant to the

financial statements, are disclosed in Note 3.

b. principles of consolidationSubsidiaries are all those entities (including special purpose entities) over which the Group

has the power to govern the financial and operating policies, generally accompanying a

shareholding of more than one-half of the voting rights. The existence and effect of potential

voting rights that are currently exercisable or convertible are considered when assessing whether

the Group controls the entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group.

The purchase method of accounting is used to account for the acquisition of subsidiaries by

the Group. They are de-consolidated from the date that control ceases.

The consolidated financial statements incorporate the assets and liabilities of Airservices Pacific

Incorporated (API) which is controlled by Airservices Australia as at 30 June 2007. API's reporting

date is 30 June. Airservices Australia and API together are referred to in this financial report as the

Airservices Australia Group, the Group, or the consolidated entity. The effects of all transactions

between these two entities are eliminated in full.


a. Basis of preparation (cont.)

1 summarY of siGnifiCant aCCountinG poLiCies (cont.)

58

For accounting purposes, Airservices Australia Group also controls (as defined in UIG

interpretation 112) four special purpose entities which are involved in the US cross-border

arrangement in relation to equipment associated with The Australian Advanced Air Traffic System

(TAAATS) and radar systems. However, as Airservices Australia Group has no ownership interest

in these entities and they are immaterial to the Group, these entities are not consolidated but

instead are disclosed in note 8.

The parent entity and consolidated entity’s results are not considered materially different for the

year ended 30 June 2007 and therefore the parent entity results are not separately disclosed in

this financial report.

c. foreign currency translation

(i) Functional and presentation currencyItems included in the financial statements of the Airesrvices Australia Group and the subsidiary

are measured using the currency of the primary economic environment in which the entity

operates (“the functional currency”). The functional currency of API is the United States dollar

while that of Airservices Australia is the Australian dollar. The presentation currency of both

entities is the Australian dollar.

(ii) Transactions and balancesTransactions in foreign currencies are initially recorded in the functional currency using the

exchange rates prevailing at the dates of the transactions. Exchange differences arising from

the settlement of these transactions are taken to the income statement. Monetary assets and

liabilities denominated in foreign currencies are translated at the rate of exchange ruling at

the balance sheet date, with any exchange differences being taken to the income statement

(iii) group companiesAs at the reporting date the assets and liabilities of API are translated into Australian dollars at

the rate of exchange prevailing at the balance sheet date and the income statement is translated

at the weighted average exchange rate for the year. The exchange differences arising on the

retranslation are taken directly to a separate component of equity.



b. principles of consolidation (cont.)

59


d. revenue recognition

rendering of servicesRevenue is recognised when services are rendered for both airways and commercial revenue.

The prices charged for regulated services are in accordance with the agreements negotiated

with customers and endorsed by the Australian Competition and Consumer Commission (ACCC).

In accordance with the Long Term Pricing Agreement implemented in January 2005, revenue

in excess of the risk sharing threshold agreed with customers and revenue related to new

CASA regulations which have not yet been introduced, have been set aside in a provision

against airways revenue or raised as a credit note.

Sale of goodsRevenue is recognised when significant risks and rewards of ownership of the goods have passed

to the buyer and can be measured reliably. Risks and rewards are considered passed to the buyer

at the time of delivery of the goods to the customer.

Interest incomeRevenue is recognised as interest accrues using the effective interest method. This is a method

of calculating the amortised cost of a financial asset and allocating the interest income over the

relevant period using the effective interest rate, which is the rate that exactly discounts estimated

future cash receipts through the expected life of the financial instrument to the net carrying

amount of the financial asset.

e. property, plant and equipment

Asset recognition thresholdPurchases of property, plant and equipment are recognised initially at cost in the Balance Sheet,

except for purchases less than $1,000, which are expensed in the year of acquisition (other than

where they form part of a group of similar items which are significant in total). The threshold was

reduced from $10,000 to $1,000 during the year.


60

Cost and valuationProperty, plant and equipment are measured at cost or at fair value, less, where applicable,

accumulated depreciation and any accumulated impairment losses.

Assets purchased by Airservices Australia Group are initially recorded at cost and represent costs

directly attributable to the acquisition. Labour and direct overheads incurred in installation are

capitalised and added to the cost. Assets constructed by Airservices Australia Group are initially

recognised at the cost of materials, labour and direct overheads.

All costs associated with repairs and maintenance are charged to the income statement during

the financial period in which they are incurred.

revaluationsFollowing initial recognition at cost, property, plant and equipment are carried at a revalued

amount which is the fair value at the date of the revaluation. Fair value is determined by reference

to market based evidence, which is the amount for which the assets could be exchanged

between a knowledgeable willing buyer and a knowledgeable willing seller in an arm’s length

transaction as at the valuation date. Where there was no market based evidence of fair value due

to the specialised nature of some of the buildings, plant and equipment, an estimate of the fair

value was used by the valuer based upon a depreciated replacement cost approach.

Any revaluation surplus is credited to the asset revaluation reserve included in the equity section

of the balance sheet unless it reverses a revaluation decrease of the same asset previously

recognised in the income statement, in which case the increase is recognised in profit or loss.

Any revaluation deficit is recognised in the income statement, except that a decrease offsetting

a previous surplus for the same asset is debited directly to the asset revaluation reserve to the

extent of the credit balance existing in the revaluation reserve for that asset. Any accumulated

depreciation as at the revaluation date is eliminated against the gross carrying amount of the

asset and the net amount is restated to the revalued amount of the asset. The revaluation surplus

is accounted for net of deferred tax in the asset revaluation reserve.

Upon disposal, any revaluation reserve relating to the particular asset being sold is transferred

to retained earnings.



e. property, plant and equipment (cont.)

61

Independent valuations are performed with sufficient regularity to ensure that the carrying

amount does not differ materially from the asset’s fair value at the balance sheet date.

Revaluations are conducted by an independent qualified valuer.

Derecognition and disposalAn item of property, plant and equipment is derecognised upon disposal or when no future

economic benefits are expected to arise from the continued use of the asset. Any gain or loss

arising from derecognition, calculated as the difference between net disposal proceeds and

carrying value, is included in the income statement in the year the asset is derecognised.

ImpairmentThe carrying values of property, plant and equipment are reviewed for impairment when events

or changes in circumstances indicate that the carrying value may not be recoverable, and, as a

minimum, at least annually.

For an asset that does not generate largely independent cash inflows, the recoverable amount

is determined for the cash-generating unit to which it belongs. If any such indication exists

and where the carrying values exceed the estimated recoverable amount, the assets or cash-

generating units are written down to their recoverable amount.

The recoverable amount of property, plant and equipment is the greater of fair value less costs

to sell and the value in use. In assessing the value in use, the estimated future cash flows are

discounted to their present value using a market determined risk adjusted discount rate. Any

impairment losses are recognised immediately in the income statement. Non-financial assets that

suffer an impairment are reviewed for possible reversal of the impairment at each reporting date.

leasesOperating lease payments where the lessor effectively retains substantially all of the risks and

benefits of ownership of leased assets are included in the determination of the operating profit

in equal instalments over the lease term.




revaluations (cont.)

62

Leases of fixed assets where substantially all the risks and benefits incidental to ownership of the

asset, but not legal ownership, are transferred to Airservices Australia Group are classified as finance

leases. Finance leases are capitalised at the inception of the lease at the lower of the present value

of minimum lease payments, including any guaranteed residual values, and fair value.

Lease payments are apportioned between the finance charges and reduction of the lease liability

so as to achieve a constant rate of interest on the remaining balance of the liability.

Finance charges are accounted for as an expense.

DepreciationProperty, plant and equipment, excluding freehold land, are depreciated at rates based upon

their expected useful lives using the straight line method. The expected useful lives are

as follows:

Buildings (including fittings) 10-40 years

Infrastructure, plant and equipment 3-20 years

The assets’ useful lives are subjected to regular review and are adjusted if deemed appropriate.

SparesAsset-specific spare parts (repairable spares) have been treated as plant and equipment and

depreciated over the useful life of the parent asset to which they are related.

f. intangible assetsIntangible assets acquired separately are initially measured at cost. Following initial recognition,

intangible assets are carried at cost less any accumulated amortisation and impairment losses.

Where amortisation is charged on assets with finite lives, this expense is taken to the income

statement. Software is amortised over 3-10 years.

Research costs associated with in-house developed intangible assets are expensed as incurred.

Costs incurred on development projects (relating to the design and testing of new improved

products) are recognised as intangible assets when it is probable that the project will be a

success considering its commercial and technical feasibility and its cost can be measured reliably.

The carrying value of development costs is reviewed for impairment annually or more frequently

if there is evidence to suggest that the carrying value may not be recoverable.



leases (cont.)


63

Gains or losses arising from derecognition of an intangible asset are measured as the difference

between the net disposal proceeds and the carrying value of the asset as at that date and are

recognised in the income statement.

g. inventoriesInventories consist of retail and publication material for sale to the aviation industry, and

consumable spares used for operational equipment. Inventories are valued at the lower of cost

and net realisable value, using the weighted average unit cost method. Net realisable value is the

estimated selling price in the ordinary course of business, less estimated costs of completion and

the estimated costs necessary to make the sale.

h. trade and other receivablesTrade receivables are initially recognised at amortised cost and subsequently measured at fair

value less allowance for impairment. The terms of all invoices are 28 days. Collectability of trade

receivables is reviewed on an ongoing basis. Receivables which are known to be uncollectable

are written off. An allowance for impairment is established when there is objective evidence

that the group will not be able to collect all amounts due according to the original terms of the

receivables. The amount of the allowance is the difference between the asset’s carrying amount

and the present value of estimated future cash flows, discounted at the original effective interest

rate. Cash flows relating to short term receivables are not discounted if the effect of discounting

is immaterial. Historical information on bad debts and the economic environment under which

the customers operate in are taken into consideration in determining the allowance.

The movement in the allowance for impairment is recognised in the income statement.

i. trade and other payableTrade creditors and accruals are recognised at their nominal amounts, being the amounts at

which the liabilities will be settled. Liabilities are recognised to the extent that the goods and

services have been received (and irrespective of having been incurred).

j. DividendProvision is made for the amount of any dividend approved by the Minister for Transport and

Regional Services but unpaid, prior to the end of the period.



f. intangible assets (cont.)

64

k. Cash and cash equivalentCash in the balance sheet comprises cash at bank and in hand and deposits at call which are

readily convertible to cash on hand. For the purposes of the cash flow statement, cash includes

cash and cash equivalents as defined above, net of outstanding bank overdrafts.

l. income taxThe income tax expense for the period is the tax payable on the current period’s taxable income

based on the national income tax rate adjusted by changes in deferred tax assets and liabilities

attributable to temporary differences between the tax bases of assets and liabilities and their

carrying amounts in the financial statements.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates

expected to apply when the assets are recovered or liabilities are settled, based on those tax

rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are

applied to the cumulative amounts of deductible and taxable temporary differences to measure

the deferred tax asset or liability. An exception is made for certain temporary differences arising

from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised

in relation to these temporary differences if they arose in a transaction, other than a business

combination, that at the time of the transaction did not affect either accounting profit or taxable

profit or loss.

Deferred tax assets are recognised for deductible temporary differences only if it is probable that

future taxable amounts will be available to utilise those temporary differences.

Deferred tax liabilities and assets are not recognised for temporary differences between the

carrying amount and tax bases of investments in controlled entities where the parent entity

is able to control the timing of the reversal of the temporary differences and it is probable that

the differences will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset

current tax assets and liabilities and when the deferred tax balances relate to the same taxation

authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable

right to offset and intends either to settle on a net basis, or to realise the asset and settle the

liability simultaneously.



65

Income taxes relating to items recognised directly in equity are recognised in equity and not

in the income statement.

m. other taxesRevenues, expenses and assets are recognised net of GST except.

where the GST incurred on a purchase of goods and services is not recoverable from the •

taxation authority, in which case the GST is recognised as part of the cost of acquisition of

the asset or as part of the expense item as applicable; and

receivables and payables are stated gross of GST.•

The net amount of GST recoverable from, or payable to, the taxation authority is included as part

of receivables or payables in the balance sheet.

Cash flows are included in the cash flow statement on a gross basis and the GST component of

cash flows arising from investing and financing activities, which is recoverable from, or payable

to, the taxation authority is classified as operating cash flows.

Commitments and contingencies are disclosed GST inclusive.

n. recoverable amount of non-current asset.All assets are subjected to impairment tests at each reporting date. Where an indicator of

impairment exists, a formal estimate of the recoverable amount is made. Where the carrying

amount exceeds the recoverable amount, the asset is considered impaired and is written down

to its recoverable amount.

Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined

for each asset, unless the asset’s value in use cannot be estimated to be close to its fair value less

costs to sell and it does not generate cash flows that are largely independent of those from other

assets or groups of assets, in which case, the recoverable amount is determined for the cash

generating unit to which the asset belongs.

In assessing value in use, the estimated future cash flows are discounted to their present value

using a market-determined risk adjusted discount rate.



l. income tax (cont.)

66



o. interest-bearing loans and borrowingsAll loans and borrowings are initially recognised at the fair value of consideration received

net of any directly attributable transaction costs.

After initial recognition, loans and borrowings are subsequently measured at their amortised

cost. Interest is accrued (using the effective interest rate method) over the period it becomes

due and is recognised in the income statement at that time.

Borrowings are classified as current liabilities unless the Group has an unconditional right to

defer settlement of the liability for at least 12 months after the balance sheet date.

p. provisionsProvisions are recognised when there is a present obligation (legal or constructive) as a result

of a past event, it is probable that an outflow of resources embodying economic benefits

will be required to settle the obligation and a reliable estimate can be made of the amount

of the obligation.

Where some or all of a provision is to be reimbursed, the reimbursement is recognised as a

separate asset but only when the reimbursement is virtually certain. The expense relating to

any provision is presented in the income statement net of any reimbursement.

If the effect of the time value of money is material, provisions are determined by discounting

the expected future cash payments using interest rates on national government-guaranteed

securities with terms to maturity that match, as closely as possible, the estimated future cash

outflows. When discounting is used, the increase in provision due to the passage of time is

recognised as a finance cost.

q. employee benefits

Classification of employee entitlementsWhere employees are entitled to take their accrued annual leave or long service leave during the

next 12 months, the provision relating to these employees is recorded as a current liability, even

though the employee may not be expected to take the leave for an extended period.

67



Wages, salaries and annual leaveLiabilities for wages, salaries and annual leave are recognised, and are measured as the amount

unpaid at the reporting date at pay rates which will be applicable when paid, in respect of

employees’ services up to that date.

ValuationEmployee benefit provisions for long service leave, early retirement benefit and superannuation

are assessed by qualified actuaries on a half yearly basis. Various actuarial assumptions are

required when determining the Group's obligations, and these are discussed at Note 3 and

Note 17.

long service leaveThe liability for long service leave is recognised in the provision for employee benefits and

measured as the present value of expected future payments to be made in respect of services

provided by employees up to the reporting date, using the projected unit credit method.

Consideration is given to expected future wage and salary levels, experience of employee

departures and periods of service. Expected future payments are discounted using market

yields at the reporting date on national government bonds with terms to maturity that match,

as closely as possible, the estimated future cash outflows.

early retirement benefitA liability for early retirement benefit is recognised within the provision for separations and

redundancies in accordance with the Airservices Australia Certified Agreement 2005-2008, and

is measured at the present value of expected future payments to be made in respect of services

provided by employees up to the reporting date. Consideration is given to expected future wage

and salary levels, experience of employee departures and periods of service. Expected future

payments are discounted using interest rates on national government-guaranteed securities

with terms to maturity that match, as closely as possible, the estimated future cash outflows.

q. employee benefits (cont.)

68



SuperannuationContributions are made predominantly to AvSuper (sponsored by Airservices Australia)

and Commonwealth Superannuation Administration (ComSuper) which administers the

Commonwealth Superannuation Scheme (CSS) and Public Sector Superannuation (PSS) funds.

AvSuper has a defined benefit section and a defined contribution section within its fund.

Contributions to the AvSuper defined benefit fund are made in accordance with advice received

from the fund’s actuary. Contributions to defined contribution funds are in accordance with the

corporation’s certified agreement, having regard to legislative requirements. Contributions to

ComSuper for the PSS and CSS funds are in accordance with actuarial reports as notified by the

Department of Finance and Administration.

Contributions to all funds except the AvSuper defined benefit fund are recognised as an expense

as they become payable. With respect to the AvSuper defined benefit fund, the net of current

service costs, interest costs and the expected return on fund assets is recognised in the income

statement, whereas actuarial gains and losses are recorded directly in equity.

A liability or asset in respect of the AvSuper defined benefit superannuation plan is recognised

in the balance sheet, and is measured as the present value of the defined benefit obligation

at the reporting date plus unrecognised actuarial gains (less unrecognised actuarial losses)

less the fair value of the superannuation fund’s assets at that date and any unrecognised past

service cost. The present value of the defined benefit obligation is based on expected future

payments which arise from membership of the fund to the reporting date, calculated half yearly

by an independent actuary. Consideration is given to expected future wage and salary levels,

experience of employee departures and periods of service.

r. segment reportingA business segment is a group of assets and operations engaged in providing products or services

that are subject to risks and returns that are different to those of other business segments.

q. employee benefits (cont.)

69



s. Derivative financial instrumentsAirservices Australia Group uses derivative financial instruments such as foreign currency

contracts and interest rate swaps to hedge its risks associated with foreign currency and interest

rate fluctuations. Such derivative financial instruments are stated at fair value.

The fair value of forward currency contracts is calculated by reference to current forward

exchange rates for contracts with similar maturity profiles. The fair value of interest rate swap

contracts is determined as the difference in present value, discounted using current market rates,

of future cash flows.

For the purposes of hedge accounting, foreign currency hedges are classified as fair value

hedges as they hedge exposures to changes in the fair value of a recognised asset or liability.

For foreign currency hedges that satisfy the conditions for hedge accounting, the gain or loss on

the hedging instrument is recognised directly in equity. In relation to foreign exchange hedges

that do not meet the conditions for hedge accounting, any gain or loss from remeasuring the

hedging instrument at fair value is recognised immediately in the income statement.

t. assets classified as held for saleAssets are classified as held for sale and stated at the lower of their carrying amount and fair

value less costs to sell if their carrying amount will be recovered principally through a sale

transaction rather than through continuing use.

An impairment loss is recognised for any initial or subsequent write-down of the asset to fair

value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs

to sell an asset, but not in excess of any cumulative impairment loss previously recognised.

A gain or loss not previously recognised by the date of the sale of the asset is recognised at the

date of de-recognition.

Assets are not depreciated or amortised while they are classified as held for sale. Assets classified

as held for sale are presented separately from the other assets in the balance sheet.

70

u. Working capitalAlthough the Groups’s current liabilities exceed current assets as at the end of the current

reporting period, this is mainly a result of the disclosure requirements of the accounting

standards. Due to a large proportion of the Group’s employees being presently entitled to long

service leave and accrued recreation leave, these provisions are classified as current liabilities,

even though the employees are expected to take the leave over an extended period of time

(i.e. beyond 12 months). Also, an interest bearing loan in the form of a commercial paper facility

was treated as current due to it maturing on the 16th July, however this facility was rolled over,

and is expected to continue to be rolled over on a monthly basis.

2 finanCiaL risK manaGementThe Group’s activities expose it to a variety of financial risks; market risk (including currency

risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate

risk. The Group’s overall risk management program focuses on the unpredictability of financial

markets and seeks to minimise potential adverse effects on the financial performance of the

Group. The Group uses derivative financial instruments such as foreign exchange contracts and

interest rate swaps to hedge certain risk exposures.

Risk management is carried out by a central treasury unit under policies approved by the Board.

Group treasury identifies, evaluates and hedges financial risk in close co-operation with the

Group’s operating units based on clear principles for overall risk management, as well as written

instructions covering specific areas, such as mitigating foreign exchange, interest rate and credit

risks, use of derivative financial instruments and investing excess liquidity.

As a result of the nature of the Group’s business and internal policies dealing with the management

of financial risk, the Group’s exposure to: market, credit, liquidity, cash flow, and fair value interest

rate risk is considered to be low.



71

3 siGnifiCant aCCountinG estimates anD assumptionsThe carrying amounts of certain assets and liabilities are often determined based on estimates

and assumptions of future events. The key estimates and assumptions that have a significant risk

of causing a material adjustment to the carrying amounts of certain assets and liabilities within

the next annual reporting period are:

avsuper defined benefit planVarious actuarial assumptions are required when determining the Group’s obligations under

the AvSuper defined benefit plan. The assumptions relied on for the year to 30 June 2007 are

discussed in Note 17 (g).

Long service Leave and early retirement BenefitsVarious actuarial assumptions are required when determining the Group’s obligations for Long

Service Leave and Early Retirement Benefit Scheme. The assumptions relied on for the year to

30 June 2007 include; salary increases of 2% immediately, 2% in December 2007, 2% p.a. for other

promotional increases, and salary increases of 4% p.a. for subsequent years; and a discount rate

of 6.2% p.a. (being the 10 year Commonwealth Government Bond rate at 30 June 2007).

4 seGment reportinGAirservices Australia operates predominantly in the Australian Aviation Industry.


72


5 profit from ContinuinG operations

2007$'000

2006$'000

a. profit from Continuing operations before income tax is arrived at after including the following items of revenue and expenditure:

Revenue

Finance income

- Investments 479 1,470

- Deposits 61 95

- Interest rate swap fair value gain - 650

- Other 93 169

Total finance income 633 2,384

Expenses

Employee expenses

- Wages and salaries 256,584 252,173

- Superannuation (defined contribution funds) 21,477 21,432

- Leave and other entitlements 83,230 91,744

- Separation and redundancies 21,358 5,252

Employee expenses (excluding defined benefit superannuation expense) 382,649 370,601

Net defined benefit superannuation expense recognised in employee expenses

- Current service cost 32,839 32,517

- Interest cost 29,332 25,926

- Expected return on fund assets (49,044) (45,378)

Defined benefit superannuation expense 13,127 13,065

Total employee expenses 395,776 383,666

Finance costs

- Loans 6,970 6,243

- Interest rate swap fair value loss 1,605 -

- Other 339 128

Total finance costs 8,914 6,371

Decrease in allowance for impairment (receivables) (53) (1,301)

Bad debts written off 145 372

Total bad and doubtful debt expenses 92 (929)

Operating lease charges 17,552 17,394

73


2007$'000

2006$'000

a. profit from Continuing operations before income tax is arrived at after including the following items of revenue and expenditure (cont.):

Gain/ (loss) from sale/ (write-off) of non-current assets

- Proceeds from disposal of assets 3,688 4,309

- Written-down value of disposed assets (3,824) (4,497)

Net loss from sale of non-current assets (136) (188)

Written down value of scrapped assets (456) (254)

Net loss from disposal of assets (592) (442)

5 profit from ContinuinG operations (cont.)

74



b. supplementary analysis of the income statement for the year ended 30 June 2007.

2007Airways

ActivitiesOther

Commercial Activities

Total Commercial

Activities

Community Service

Activities

Profit from Ordinary

Activities

$’000 $’000 $’000 $’000 $’000

Airways revenue 676,659 - 676,659 - 676,659

Other commercial revenue - 34,442 34,442 - 34,442

Total sales revenue 676,659 34,442 711,101 - 711,101

Finance income 633 - 633 - 633

Miscellaneous income 4,868 - 4,868 - 4,868

Reversal of previous asset write-downs 12,106 - 12,106 - 12,106

Total income 694,266 34,442 728,708 - 728,708

Total expenses 539,816 31,784 571,600 3,800 575,400

Net profit/(loss) before tax 154,450 2,658 157,108 (3,800) 153,308

Income tax expense/(refund) 46,901 807 47,708 (1,154) 46,554

Net profit/(loss) after tax 107,549 1,851 109,400 (2,646) 106,754

2006 Airways

Activities Other

Commercial Activities

Total Commercial

Activities

Community Service

Activities

Profit from Ordinary Activities

$’000 $’000 $’000 $’000 $’000

Airways revenue 643,388 - 643,388 - 643,388

Other commercial revenue - 34,415 34,415 - 34,415

Total sales revenue 643,388 34,415 677,803 - 677,803

Finance income 2,384 - 2,384 - 2,384

Miscellaneous income 831 - 831 - 831

Reversal of previous asset write-downs 2,442 - 2,442 - 2,442

Total income 649,045 34,415 683,460 - 683,460

Total expenses 513,099 30,935 544,034 3,730 547,764

Net profit/(loss) before tax 135,946 3,480 139,426 (3,730) 135,696

Income tax expense/(refund) 41,919 1,341 43,260 (1,160) 42,100

Net profit/(loss) after tax 94,027 2,139 96,166 (2,570) 93,596

75



c. Community service activities

The cost of community service activities undertaken by Airservices Australia Group and charged

to operations during the year to meet the specific requirements of the government, considered

by the Board to be non-commercial in nature, comprise:

2007 2006

$‘000 $‘000

Provision for environmental information (reports, statistics and maps) by:

- Environmental Services Branch 484 262

- Noise and Flight Path Monitoring System 2,920 3,013

Noise inquiry lines 396 455

Total costs 3,800 3,730

Included in the profit from ordinary activities before income tax is $3.800m (2006: $3.730m)

in direct costs for community service activities undertaken by Airservices Australia Group and

charged to operations during the year to meet specific requirements of the government.

76

6 inCome tax

a. income tax expense

2007 2006

$'000 $'000

Current tax 52,727 42,648

Deferred tax (6,173) (548)

Income tax expense attributable to profit from continuing operations 46,554 42,100

b. reconciliation of income expense to prima facie tax payable

2007 2006

$'000 $'000

Profit from continuing operations before income tax expense 153,308 135,696

Prima facie income tax expense at 30% 45,992 40,709

Tax effect of amounts which are not deductible/assessable in calculating taxable income:

- Provision for Tax Law Amendment Act (No. 2) 80 11

- Non-deductible legal costs 84 344

- Non-assessable legal settlement (480) -

- Other non-deductible expenditure 294 130

- Depreciation of revalued assets 4,332 1,831

- Revaluation of non-current assets (3,632) (733)

- Research and development tax incentive (116) (192)

Income tax expense 46,554 42,100


7 DiviDenDsA final dividend for the year ended 30 June 2006 of $34.5m (2006: $21.5m) was paid in February

2007. An interim dividend for the year ending 30 June 2007 of $30.8m (2006: $21.6m) was paid

in June 2007.

77


8 investments in ControLLeD entities

airservices pacific incorporated (api)Airservices Australia has owned 100% of API, based in Delaware in the United States of America, since

December 2004. The investment comprises 1,000 shares at a nominal value of US$1.00 per share.

Airservices Australia previously made available a loan facility of US $0.700m to API at normal

commercial terms and conditions in December 2004 which was repaid with interest in December

2006. A second facility of US $0.700m was made available in September 2005. This facility was fully

drawn in December 2006 to repay the maturing issue and meet working capital requirements.

The new facility expires in December 2009 but can be repaid with interest at any time prior to

maturity. As at 30 June 2007 the principal amount of the loan equates to AUD $0.826m.

special purpose entitiesIn accordance with the indicators of control for accounting purposes detailed in UIG Interpretation

112, Airservices Australia Group controls four special purpose entities which are involved in the

US cross-border arrangement in relation to equipment associated with 'The Australian Advanced

Air Traffic System' (TAAATS) and radar systems discussed in note 29. However the issued capital in

these entities, which totals US$4,000, is not owned by Airservices Australia Group but is held by

two finance companies. These entities are not consolidated due to materiality.

78


9 Current assets – Cash anD Cash eQuivaLents

2007 2006

$'000 $'000

Cash at bank and on hand 3,774 6,374

Deposits at call 5,100 19,500

8,874 25,874

10 Current assets – traDe anD other reCeivaBLes

11 assets CLassifieD as heLD for saLe

A total of four land assets have been identified as surplus to the requirements of Airservices

Australia Group and have been classified as assets held for sale. The decision to dispose of the

above assets has been endorsed by the Board of Directors and their disposal is expected to be

completed within the 2007–08 financial year. The carrying amount of the assets amounted to

$0.655m (30 June 2006: $0.816m). Note that two of these assets (with carrying amounts totalling

$325k) were sold subsequent to balance date with settlement occurring on 6 August 2007.

(a) Cash at bank and on handCash at bank has a floating interest rate of 5.75% (30 June 2006: 5.25%). Cash on hand is

non-interest bearing.

(b) Deposits at callThe deposits have a floating interest rate of 6.25% (30 June 2006: 5.75%). These 11am cash at call

deposits are rolled over on a daily basis.

2007 2006

$'000 $'000

Trade receivables 72,563 71,808

Allowance for impairment (622) (675)

71,941 71,133

Other receivables 606 1,713

Accrued revenue and interest 3,638 1,334

Total current receivables 76,185 74,180

Other receivables are mainly comprised of balances associated with salary sacrifice arrangements.

79


12 non-Current assets – DeferreD tax assets

2007 2006

$'000 $'000

The balance comprises temporary differences attributed to:

Amounts recognised in the income statement

Accelerated depreciation for accounting purposes 4,922 7,651

Allowance for impairment 187 202

Employee benefits 58,649 59,049

Provision for revenue to be returned to customers 851 4,470

Provision for legal costs - 78

Interest rate swap 257 (224)

Cross-border transaction provision 473 481

Accruals 970 775

66,309 72,482

Amounts recognised directly in equity

Foreign exchange hedge reserve (891) (4)

Revaluation of land, buildings, plant and equipment (22,141) (16,978)

Defined benefit asset (33,343) (23,396)

(56,375) (40,378)

Net deferred tax assets 9,934 32,104

Movements:

Opening balance at 1 July 32,104 61,374

Credited/ (charged) to the income statement (6,173) 566

Credited/ (charged) to equity (15,997) (29,836)

Closing balance at 30 June 2007 9,934 32,104

80


13 non-Current assets - propertY, pLant anD eQuipment

revaluation of land, buildings, plant and equipmentThe valuation basis for land, buildings, plant and equipment is fair value. Fair value is determined

by reference to market based evidence, which is the amount for which the assets could be

exchanged between a knowledgeable willing buyer and a knowledgeable willing seller in an arm’s

length transaction as at the valuation date. Where there was no market based evidence of fair

value due to the specialised nature of some of the buildings, plant and equipment, an estimate

of the fair value was used by the valuer based upon a depreciated replacement cost approach.

Airservices Australia Group engaged accredited valuers CB Richard Ellis to value its land and Aon

Valuation Services for the valuation of buildings, plant and equipment. The reversal of prior year

revaluation decreases (for the same asset) were recognised by crediting the income statement.

In all other cases, the revaluation surplus net of deferred income taxes was credited to the asset

revaluation reserve.

The effective date of the revaluation was 30 June 2007.

Item

Land Buildings Total land and buildings

Plant and equipment

Assets under construction

Total

$’000 $’000 $’000 $’000 $’000 $’000

Gross value - 1 July 2006 36,030 105,393 141,423 208,401 128,154 477,978

Additions - 25 25 4,980 98,507 103,512

Commissioned assets under construction - 3,317 3,317 50,095 (53,412) -

Assets under construction commissioned as software (refer note 14)

- - - - (14,741) (14,741)

Revaluations 10,554 8,486 19,040 (19,152) - (112)

Disposals - (177) (177) (12,144) - (12,321)

Assets transferred from held for sale 161 - 161 - - 161

Reclassifications 150 (150) - (315) - (315)

Gross value – 30 June 2007 46,895 116,894 163,789 231,865 158,508 554,162

Accumulated depreciation - 1 July 2006 - (3,536) (3,536) (35,855) - (39,391)

Depreciation charged - (8,560) (8,560) (31,290) - (39,850)

Revaluations - 7,808 7,808 21,895 - 29,703

Disposals - 115 115 7,256 - 7,371

Accumulated depreciation – 30 June 2007 - (4,173) (4,173) (37,994) - (42,167)

Net book value – 30 June 2007 46,895 112,721 159,616 193,871 158,508 511,995

81


Item

Land Buildings Total land and buildings

Plant and equipment

Assets under construction

Total

$’000 $’000 $’000 $’000 $’000 $’000

Gross value - 1 July 2005 14,543 98,004 112,547 169,749 111,724 394,020

Additions - 19 19 6,138 104,134 110,291

Commissioned assets under construction 240 9,189 9,429 66,244 (75,673) -

Assets under construction commissioned as software (refer note 14)

- - - - (12,031) (12,031)

Revaluations 22,064 (2,301) 19,763 (27,369) - (7,606)

Disposals (1) (178) (179) (7,364) - (7,543)

Assets transferred to held for sale (816) - (816) - - (816)

Reclassifications - 660 660 1,003 - 1,663

Gross value – 30 June 2006 36,030 105,393 141,423 208,401 128,154 477,978

Accumulated depreciation - 1 July 2005 - (2,611) (2,611) (30,378) - (32,989)

Depreciation charged - (9,032) (9,032) (33,736) - (42,768)

Revaluations - 8,618 8,618 27,031 - 35,649

Disposals - 149 149 2,231 - 2,380

Reclassifications - (660) (660) (1,003) - (1,663)

Accumulated depreciation – 30 June 2006 - (3,536) (3,536) (35,855) - (39,391)

Net book value - 30 June 2006 36,030 101,857 137,887 172,546 128,154 438,587

13 non-Current assets - propertY, pLant anD eQuipment (cont.)

revaluation of land, buildings, plant and equipment (cont.)

82


13 non-Current assets - propertY, pLant anD eQuipment (cont.)

revaluation of land, buildings, plant and equipment (cont.)

Carrying amounts that would have been recognised if land, buildings, plant and equipment

were measured using the cost model:

2007 2006

$'000 $'000

Land

At cost 3,938 3,791

Buildings

At cost 207,512 206,614

Accumulated depreciation (125,374) (118,951)

Net carrying amount 82,138 87,663

Plant and equipment

At cost 601,323 588,050

Accumulated deprecation (371,964) (367,085)

Net carrying amount 229,359 220,965

14 non-Current assets – intanGiBLe assets (softWare)

2007 2006

Internally developed

software

Other intangible

assets

Total intangible

assets

Internally developed

software

Other intangible

assets

Total intangible

assets

$’000 $’000 $’000 $’000 $’000 $’000

Gross value – 1 July 78,958 26,878 105,836 67,047 26,750 93,797

Additions - 84 84 38 - 38

Transferred from assets under construction 14,741 - 14,741 11,903 128 12,031

Disposals (61) - (61) (30) - (30)

Gross value – 30 June 93,638 26,962 120,600 78,958 26,878 105,836

Accumulated amortisation – 1 July (42,723) (8,763) (51,486) (35,998) (5,217) (41,215)

Amortisation for the year (8,647) (3,611) (12,258) (6,754) (3,546) (10,300)

Disposals 54 - 54 29 - 29

Accumulated amortisation – 30 June (51,316) (12,374) (63,690) (42,723) (8,763) (51,486)

Net intangibles – 30 June 42,322 14,588 56,910 36,235 18,115 54,350

83


15 provisions anD paYaBLes

a. Current payables and provisions

2007 2006

$'000 $'000

Current payables

Suppliers

- Trade payables 10,147 15,197

Employees

- Salaries and wages 6,604 4,952

- Superannuation 653 693

- Recreation leave 31,902 31,655

Revenue received in advance 2,645 2,742

Interest payable 829 788

Group tax payable 3,110 3,265

Accrued payroll tax 1,483 2,492

Net goods and services tax payable 9,376 7,295

Other accrued expenses 24,887 35,102

Total current payables 91,636 104,181

Current provisions

Employee benefits

- Long service leave 93,969 92,613

- Separations and redundancies 10,491 11,131

Workers compensation 496 389

Taxation 8,156 13,377

Revenue to be returned to customers 2,837 14,899

Cross-border transaction 100 250

Litigation and legal costs - 259

Total current provisions 116,049 132,918

Total current provisions and payables 207,685 237,099

b. non-current provisionsEmployee benefits

- Long service leave 10,527 15,211

- Separations and redundancies 33,672 32,035

Workers compensation 2,588 3,103

Cross-border transaction 1,475 1,354

Total non-current provisions 48,262 51,703

84


15 provisions anD paYaBLes (cont.)

c. movement in provisions (excluding employee benefits)

2007 2006

$'000 $'000

(i) Revenue to be returned to customers (Current)

Carrying amount at start of period 14,899 -

Additional provisions recognised 2,837 18,178

Credit notes issued (14,866) -

Unused amount reversed (33) -

Payments - (3,279)

Carrying amount at end of period 2,837 14,899

(ii) Cross border transaction (Current/Non-current)

Carrying amount at start of period 1,604 3,716

Unused amount reversed - (2,000)

Payments (29) (112)

Carrying amount at end of period 1,575 1,604

(iii) Litigation and legal costs (Current)

Carrying amount at start of period 259 1,266

Unused amount reversed - (65)

Payments (259) (942)

Carrying amount at end of period - 259

d. Description of provisions

revenue to be returned to customersThe provision of $2.8m is for revenue to be returned to customers in relation to new Aviation

Rescue and Fire Fighting regulatory costs anticipated under the LTPA, but which will not be

incurred for at least twelve months (30 June 2006: $2.7m). For the 2007 year, airways revenue

did not exceed the risk sharing threshold that was agreed to under the Long Term Pricing

Agreement (LTPA), hence there is no additional airways revenue to be returned to customers

for the current year (30 June 2006: $12.2m). Under the LTPA, revenue in excess of 5% of projected

activity is available to be returned to customers subject to consultation.

85


Cross border transactionThis provision represents compliance and monitoring costs which will be paid over the term

of the cross-border financing arrangement discussed in note 29.

litigation and legal costsThis provision includes the estimated legal costs to be incurred by Airservices Australia Group

on ongoing matters which commenced prior to 30 June 2007.

Workers compensationThese provisions represent Airservices Australia Group‘s self insured liability for workers

compensation prior to 1 July 1989.

Separations and redundanciesThis includes $31.7m (30 June 2006: $34.8m) in early retirement benefits which have been

elected to be taken by employees as a lump sum on retirement. Also, $12.5m (30 June 2006:

$8.3m) relates to redundancy provisions in relation to the restructuring of the organisation.

15 provisions anD paYaBLes (cont.)

d. Description of provisions (cont.)

16 interest-BearinG Loans anD BorroWinGs

2007 2006

$’000 $’000

Unsecured loans – Bank loans

- Current (1) 44,884 100,020

- Non-Current (2) 99,409 -

Total Interest Bearing Liabilities 144,293 100,020

(1) The current year amount represents an outstanding issue under the $300m commercial paper facility which was issued on 15 June 2007 and matures on 15 July 2007. The prior year balance represents a medium term bond that matured in November 2006.

(2) This represents a medium term bond entered into on 15 November 2006 which matures in November 2011.

86


17 DefineD Benefit funD asset

a. superannuation planAirservices Australia is the principal sponsor of the superannuation fund, AvSuper. The fund

has a defined benefit section and a defined contribution section. The defined benefit section

provides benefits based on the length of service and estimated final average salary of each

member. The defined contribution section receives fixed contributions and Airservices Australia’s

legal or constructive obligation is limited to these contributions.

The following sets out details relating to the defined benefits section of the plan.

b. Benefit assetThe amounts recognised in the balance sheet are determined as follows:

2007 2006

$’000 $’000

Present value of the defined benefit obligation (606,379) (625,327)

Fair value of defined benefit fund assets 717,523 703,315

Net benefit asset – non-current 111,144 77,988

Airservices Australia will continue to contribute to the defined benefit section of the plan in line

with the actuary’s recommendations.

Note that the present value of the defined benefit obligation has fallen by $18.9m since 30 June

2006 principally for the following reasons: the discount rate used in calculating the present value

increased from 4.8% p.a. to 5.3% p.a. in line with the increase in rates on long term Government

Bonds; and the actuarial estimate at 30 June 2006 understated the number of exits and this lead

to an overstatement of the liability by 4% as at 30 June 2006.

87


2007 2006

$’000 $’000

Cash 22,585 17,606

Equity instruments 462,719 490,655

Debt instruments 98,739 112,350

Other assets 133,480 82,704

717,523 703,315

c. Categories of plan assetsThe major categories of plan assets are as follows.

17 DefineD Benefit funD asset (cont.)

d. reconciliations

2007 2006

$’000 $’000

Reconciliation of the present value of defined benefit obligation:

Balance at the beginning of the year 625,327 614,364

Current service cost 32,839 32,517

Contribution by members 10,539 10,538

Interest cost 29,332 25,926

Actuarial (gains)/ losses on obligation (55,855) (27,049)

Benefits paid (35,803) (30,969)

Balance at the end of the year 606,379 625,327

2007 2006

$’000 $’000

Reconciliation of the fair value of plan assets:

Balance at the beginning of the year 703,315 618,398

Expected return on the plan assets 49,044 45,378

Actuarial gains/(losses) (33,804) 31,282

Contributions by Airservices Australia 24,232 28,688

Contributions by members 10,539 10,538

Benefits paid (35,803) (30,969)

Balance at the end of the year 717,523 703,315

88

e. net amount recognised in income statement


2007 2006

$’000 $’000

The amounts recognised in the income statement are as follows:

Current service cost 32,839 32,517

Interest cost on benefit obligation 29,332 25,926

Expected return on plan assets (49,044) (45,378)

Total included in employee benefits expense 13,127 13,065

Actual return on plan assets 15,240 76,660

f. principal actuarial assumptionsThe principal actuarial assumptions used (expressed as weighted averages) were as follows:

2007 2006

$’000 $’000

Discount rate 5.30% 4.80%

Expected return on plan assets 7.00% 7.00%

Future salary increases 6.00% 6.00%

The expected return on plan assets has been based on historical and future expectations

of returns for each of the major categories of asset classes as well as the expected and actual

allocation of plan assets to these major categories. This resulted in the selection of an 8% rate

of return gross of tax and net of expenses (8% in 2005–06) and a 7% rate of return net of tax

and expenses (7% in 2005–06).


89

g. employer contributions

For defined benefit members, the employers contribute at a rate sufficient to ensure that

expected benefits are fully funded by the time the benefits become payable, after allowing

for member contributions. The required employer rate will vary over time depending primarily

on the investment performance of AvSuper and the salary growth of members.

Under the Trust Deed, Airservices Australia (as Principal Employer) is required to determine

the contribution rate for the Employers after receiving advice from the AvSuper Actuary and

consulting the Trustee.

Actuarial assessments of the Plan are made each year for the Trustee, and the last such

assessment was made as at 30 June 2006. As part of the assessment (*), the actuary

recommended that the Employers involved with the AvSuper defined benefit fund contribute

at the following rates:

12% of gross salary for Air Traffic Controllers (ATCs) (18% prior to 1 February 2007)

9% of gross salary for other employees (15% prior to 1 February 2007)

3% for those employees who remain members of the Commonwealth Superannuation

Scheme (CSS).

The actuary recommended a reduction in the employer contribution rates following the recent

investment performance of AvSuper being better than the long term investment rate of 7%.

Airservices Australia is currently contributing at these rates.

(*) The objective of funding is to ensure that the benefit entitlements of members and other

beneficiaries are fully funded by the time they become payable. To achieve this objective, the actuary

has adopted a method of funding benefits known as the Attained Age Normal Funding Method. This

funding method seeks to have benefits funded by means of a total contribution which is expected

to be a constant percentage of members' salaries over their future working lifetimes.

Total employer contributions expected to be paid by Airservices Australia for the year ended

30 June 2008 amount to $17.6m.



90

The economic assumptions used by the actuary to make the funding arrangements were a long

term investment earning rate of 7% per annum (net of fees and taxes), a salary increase of 7% for

ATC's and 5.5% p.a. for non ATC's.

h. net financial position of the planIn accordance with AAS 25 Financial Reporting by Superannuation Plans, the plan's net financial

position is determined as the difference between the present value of the accrued benefits and

the net market value of plan assets. This has been determined as at the date of the most recent

financial report of AvSuper, and a surplus of $137.2m was reported.

i. historic summary


g. employer contributions (cont.)


2007 2006 2005 2004

$’000 $’000 $’000 $’000

Plan assets 717,523 703,315 650,946 565,266

Defined benefit plan obligation (606,379) (625,327) (646,699) (577,952)

Surplus 111,144 77,988 4,247 (12,686)

Experience (gains) / losses adjustments arising on plan liabilities (34,959) 1,677 584 (6,276)

Experience gains / (losses) adjustments arising on plan assets (33,804) 31,282 29,460 4,343

91


18 reserves & retaineD earninGs

2007 2006

$’000 $’000

a. reservesAsset revaluation reserve 51,388 39,615

Foreign exchange hedge reserve (2,107) (9)

Foreign currency translation reserve 22 27

49,303 39,633

Movements

Asset revaluation reserve

Opening balance 39,615 21,774

Net revaluation 12,237 17,921

Revaluation reserve - disposals (net of deferred tax) (464) (80)

51,388 39,615

Foreign exchange hedge reserve

Opening balance (9) -

Net revaluation (2,098) (9)

(2,107) (9)

Foreign currency translation reserve

Opening balance 27 (3)

Net revaluation (5) 30

22 27

b. retained earningsOpening balance 56,165 (35,293)

Net profit after tax for the year 106,754 93,596

Dividend paid (65,300) (43,100)

Defined benefit fund movements direct to equity (net of deferred tax) 15,436 40,882

Revaluation reserve - disposals (net of deferred tax) 464 80

113,519 56,165

19 ContinGenCies

Currently there are four sites that potentially may have been contaminated by the use or storage

of diesel. Based on initial review of these sites, management believes that the cost for any

remediation work required to rectify any potential contamination will not be significant.

92


20 stanDBY arranGements anD unuseD CreDit faCiLities

2007 2006

$’000 $’000

Bank overdraft (expires 1 October 2011) 5,000 5,000

Total credit facilities 5,000 5,000

Amount utilised - -

Unused credit facility 5,000 5,000

Loan facilities

- Commercial paper (only expires if cancelled) 300,000 300,000

- Domestic bond (matures 15 November 2011) 100,000 100,000

- Standby (expires 31 May 2008) 100,000 60,000

- 11am Borrowing (due for review 11 May 2008) 20,000 10,000

Total loan facilities 520,000 470,000

Amount utilised (144,293) (100,020)

Unused loan facility 375,707 369,980

21 remuneration of auDitors

2007 2006

$ $

Auditing services provided by the Australian National Audit Office 308,000 256,100

Audit services for Airservices Australia Group are provided by the Australian National Audit

Office and are subcontracted to PricewaterhouseCoopers. Also included in the amount above

is $28,000 relating to the audit of API's Financial Statements.

Taxation services were provided by Pricewaterhouse Coopers during the year which totalled

$75,908.

93


22 remuneration of DireCtors

2007 2006

$ $

Amounts received, or due and receivable, by Directors 456,079 479,675

The remuneration of the Chief Executive Officer (who was an Executive Director during the year)

is disclosed with the remuneration of executives in note 23 and is not included in Director’s

remuneration. A number of Directors served for only part of the 2007 year as detailed in note 24.

The $456,079 for 2007 consists of short-term employee benefits ($418,390) and post-

employment benefits ($37,689).

23 remuneration of exeCutives

Executive remuneration payments include base salary, termination payments and pay at risk.

Remuneration received by the Executive managers, whose remuneration was at least $130,000,

totalled $4,458,912 (2006: $4,591,374). Executive managers are those who are concerned with,

or take part in, the management of Airservices Australia Group and includes the Chief Executive

Officer. The $4,458,912 for 2007 consists of short-term employee benefits ($3,699,308); long-term

benefits ($98,190); post employee benefits ($408,436); and termination benefits ($252,978).

A number of Executives served for only part of the 2007 year as detailed in note 24.

94

24 reLateD partY transaCtions

DirectorsThe names of persons who were Directors of Airservices Australia Group during the financial year

and up to the date of signing these financial statements are as follows:


Chairman Status Commenced Finished

Nick Burton Taylor AM Ongoing Current

Deputy Chairman Status Commenced Finished

Christine Goode Ongoing Current

Chief Executive Officer Status Commenced Finished

Greg Russell [i] Ongoing Current

Alastair Hodgson Acting 2-Sep-06 8-Sep-06

4-Dec-06 13-Dec-06

10-Feb-07 20-Feb-07

Ken McLean Acting 16-May-07 25-May-07

Jason Harfield Acting 8-Jun-07 24-Jun-07

Directors Status Commenced Finished

Alice Williams Ongoing Current

Henk Meertens Ongoing Current

David Forsyth Ongoing Current

Philippa Stone Ongoing 29-Jun-07

Roxley McLennan Ongoing Current

Robert Maher 8-Aug-06 Current

[i] Mr Russell is also the ongoing Chairman of the Board of Airservices Australia's wholly-owned subsidiary, Airservices Pacific Incorporated.

95

executivesThe names of persons who were Executives of Airservices Australia Group during the financial

year (excluding the CEO, included above) and up to the date of signing these financial

statements are as follows:


Executives Title Commenced Finished

Jason Harfield GM Safety Management Ongoing Current

Neal O’Callaghan GM Audit & Assurance Ongoing 15-Mar-07

GM Business Services 16-Mar-07 Current

Richard Dudley GM Corporate Affairs Ongoing Current

Andrew Clark GM Aviation Rescue and Fire Fighting Ongoing 15-Mar-07

GM Corporate Finance 16-Mar-07 Current

Wayne Emery GM Business Development Ongoing Current

Keith Orkney GM Technology and Asset Services Ongoing 14-Mar-07

Stephen Angus GM AERU Ongoing 30-Jun-07

GM ATC Reform 1-Jul-07 Current

Alan Barber GM Corporate Finance Ongoing 15-Mar-07

GM Aviation Rescue and Fire Fighting 16-Mar-07 Current

Alastair Hodgson GM People & Change Ongoing 15-Mar-07

GM Technology and Asset Services 16-Mar-07 Current

Kenneth McLean GM Air Traffic Control Ongoing Current

Brian Prendergast GM Future Direction Ongoing Current

Caroline Fleming GM People & Change 16-Mar-07 Current

Michelle Bennetts GM Audit & Assurance 16-Mar-07 Current

transactions with related partiesTransactions between related parties are on normal commercial terms and conditions unless

otherwise stated.

Certain director-related entities have transactions with Airservices Australia Group that

occur within normal customer or supplier relationships on terms and conditions no more

favourable than those which it is reasonable to expect Airservices Australia Group would have

adopted if dealing with the director-related entity at arm’s length in similar circumstances.

24 reLateD partY transaCtions (cont.)

96

These transactions include the following entities and have been described below where the

transactions are considered likely to be of interest to users of these financial statements:

- Legal services amounting to $58,673 (2006: $133,332) have been provided to Airservices

Australia Group by Freehills during the year, a firm that is a member of the panel of legal advisors

to Airservices Australia and in which Ms Philippa Stone is a partner. Ms Stone resigned from the

Board on 29 June 2007.

- Employer superannuation contributions were made to AvSuper Pty Ltd, a superannuation

fund, of which Mr Alan Barber and Mr Neal O'Callaghan are trustee directors. Airservices Australia

Group is reimbursed by AvSuper Pty Ltd for administrative costs incurred on behalf of the

superannuation fund's management.

- To the extent permitted by law, Airservices Australia Group provides indemnities to its directors

and officers to complement the insurance arrangements that it has in place.

- Airservices Pacific Incorporated (the wholly owned subsidiary of Airservices Australia) received

consulting services from Mr Roger Ray (Director of API) amounting to US$12k.


24 reLateD partY transaCtions (cont.)

transactions with related parties (cont.)

25 finanCiaL instruments

financial instrumentsAirservices Australia Group is exposed to financial risks arising from movements in interest

rates and foreign exchange rates. Airservices Australia uses derivative financial instruments to

minimise the impact of adverse movement in rates within the framework of a comprehensive set

of risk management policies approved by the Directors. Financial risk is managed centrally and

speculative trading is strictly prohibited.

interest rate risk exposuresThe following table summarises the interest rate risk exposures of Airservices Australia Group,

together with effective interest rates at balance date.

97


2007 Fixed interest maturing in:

Notes Average interest

rate

Floating interest

rate

1 year or less

1 to 5 years

More than 5

years

Non- interest bearing

Total

$’000 $’000 $’000 $’000 $’000 $’000

Financial assets

Cash and deposits 9 6.09% 7,500 - - - 1,374 8,874

Receivables 10 - - - - - 76,185 76,185

Total 7,500 - - - 77,559 85,059

Financial liabilities

Trade and other payables (2) 15 - - - - - 59,734 59,734

Bank loans – bonds 16 6.41% - - 99,409 - 99,409

Interest rate swaps (1) - 100,000 - (100,000) - - -

Interest rate swaps (1) - (70,000) 21,000 49,000 - - -

Commercial Paper 16 6.33% 44,884 - - - - 44,884

Total 74,884 21,000 48,409 - 59,734 204,027

Net Financial Assets / (Liabilities) (67,384) (21,000) (48,409) - 17,825 (118,968)

2006 Fixed interest maturing in:

Notes Average interest

rate

Floating interest

rate

1 year or less

1 to 5 years

More than 5

years

Non- interest bearing

Total

$’000 $’000 $’000 $’000 $’000 $’000

Financial assets

Cash and deposits 9 5.63% 24,981 - - - 893 25,874

Receivables 10 - - - - - 74,180 74,180

Total 24,981 - - - 75,073 100,054


Trade and other payables (2) 15 - - - - - 72,526 72,526

Bank loans – bonds 16 6.49% - 100,020 - - - 100,020

Interest rate swaps (1) - 100,000 (100,000) - - - -

Interest rate swaps (1) - (77,000) - 77,000 - - -

Total 23,000 20 77,000 - 72,526 172,546

Net Financial Assets / (Liabilities) 1,981 (20) (77,000) - 2,547 (72,492)

(1) Notional principal amounts

(2) This item excludes amounts for staff recreation leave liabilities

25 finanCiaL instruments (cont.)

interest rate risk exposures (cont.)

98


reconciliation of net financial assets/(liabilities) to net assets


Notes 2007 2006

$'000 $'000

Net financial assets/(liabilities) as above (118,968) (72,492)

Other current assets 10,210 3,727

Non-current assets 12,13,14,17 689,983 603,029

Current provisions (including recreation leave) 15 (147,951) (164,573)

Non-current provisions 15 (48,262) (51,703)

Net assets as per Consolidated Balance Sheet 385,012 317,988

forward exchange ContractsForward exchange contracts are used to hedge Airservices Australia Group’s exposure to foreign

currency exchange rate risk. This arises primarily from committed transactions relating to capital

expenditure program undertakings, asset sales and revenue earned from international activities.

At balance date, the details of outstanding contracts are (Australian dollar equivalents):

Sell US Dollars Buy Australian Dollars Average Exchange Rate

2007 2006 2007 2006

$’000 $’000 $US/$1 $US/$1

Maturity

3 months or less - - - -

Greater than 3 months but less than 1 year - 949 - 0.7379

Greater than 1 year - - - -

Buy EUROs Sell Australian Dollars Average Exchange Rate

2007 2006 2007 2006

$’000 $’000 EURO/$1 EURO/$1

Maturity

3 months or less - 1,391 - 0.6092

Greater than 3 months but less than 1 year 6,134 622 0.5802 0.6055

Greater than 1 year 6,866 - 0.5845 -

99


Buy US Dollars Sell Australian Dollars Average Exchange Rate

2007 2006 2007 2006

$’000 $’000 $US/$1 $US/$1

Maturity

3 months or less 7,373 6,588 0.7370 0.7352

Greater than 3 months but less than 1 year 10,510 14,004 0.7316 0.7347

Greater than 1 year - 13,742 - 0.7334

forward exchange Contracts (cont.)


Credit risk exposuresCredit risk represents the risk that one party to a transaction will fail to discharge an obligation

and cause the other party to suffer a financial loss. Airservices Australia Group enters into

financial derivative contracts with counterparties with a Standard and Poors’ rating of at least AA-.

net fair value of financial assets and LiabilitiesThe carrying amounts and estimated net fair values of financial assets and financial liabilities

(including derivatives) held at balance date are given below. The net fair value of a financial asset

or a financial liability is the amount at which the asset could be exchanged, or a liability settled in

a current transaction between willing parties after allowing for transaction costs.

2007 2006

Carrying amount

Net fair value

Carrying amount

Net fair value

$’000 $’000 $’000 $’000

Financial assets

Forward exchange contracts - (2,971) - (12)

Cash and cash equivalents 8,874 8,874 25,874 25,874

Trade and other receivables 76,185 76,185 74,180 74,180

Interest rate swaps - (858) - 811

85,059 81,230 100,054 100,853


Long term debt 99,409 98,151 100,020 100,934

Trade and other creditors 59,734 59,734 72,526 72,526

159,143 157,885 172,546 173,460

100

The following methods and assumptions were used to estimate the net fair value of each class

of financial instrument.

long-term debtThe net fair value of long-term debt is determined by reference to current market rates.

Forward foreign exchange contractsThe net fair value of forward foreign exchange contracts is determined by reference to current

forward rates for contracts with similar maturity.

Interest rate swap agreementsThe net fair value of interest rate swap contracts is determined as the difference in present value,

discounted using current market rates, of the future interest cash flows.

26 monies heLD on BehaLf of thirD partiesAirservices Australia Group has been contracted by the Solomon Islands Civil Aviation Authority

and the Republic of Nauru to provide airspace management and accounts receivable services.

The contracts require Airservices Australia Group to retain cash received and to remit funds at

a later date to the Solomon Islands and Nauru Governments as required under the respective

agreements. At balance date, the money held on behalf of third parties totalled $1.926m

(2006: $1.458m) for the Solomon Islands and $0.008m (2006: $0.073m) for Nauru.

27 eConomiC DepenDenCYAirservices Australia Group is dependent on activity in the Australian aviation industry, of which

the Qantas Group is the dominant operator, representing approximately 45% (2006: 42%) of

airways revenue earned during the year.


net fair value of financial assets and Liabilities (cont.)


101


28 notes to the statement of Cash fLoWs

2007 2006

$’000 $’000

Reconciliation of cash and cash equivalents

For the purposes of the Cash Flow Statement, cash and cash equivalents comprise the following at 30 June:

Cash, advances and cash on call 8,874 25,874

Total cash and cash equivalents 8,874 25,874

Reconciliation of net profit after income tax to net cash flows from operations

Net profit after income tax 106,754 93,596

Adjustments for:

Depreciation 39,850 42,768

Amortisation 12,258 10,300

Interest received (747) (1,759)

Reversal of previous asset write-downs (12,106) (2,442)

Net loss on sale/write-off of non-current assets 592 442

Fair value adjustments to derivatives 1,366 (651)

Amortisation of premium on borrowings - (47)

Excess AvSuper defined benefit contributions (after tax) (7,774) (10,886)

Changes in assets

(Increase)/decrease in gross receivables (2,066) (8,242)

(Increase)/decrease in inventories (295) 87

(Increase)/decrease in prepayments 351 463

(Increase)/decrease in deferred tax assets 6,173 (567)

Changes in liabilities

Increase/(decrease) in employee benefits (880) (12,714)

Increase/(decrease) in allowance for impairment (53) (1,301)

Increase/(decrease) in legal provisions (259) (1,007)

Increase/(decrease) in income tax payable (5,221) (965)

Increase/(decrease) in cross-border transaction provision (29) (2,112)

Increase/(decrease) in creditors and accruals (7,468) 1,550

Increase/(decrease) in revenue to be returned to customers provision (12,062) 14,899

Net cash flow from operating activities 118,384 121,412

102

29 Cross BorDer finanCinG arranGement

During the 2003 and 2004 years, Airservices Australia Group completed a cross-border financing

arrangement in relation to equipment associated with The Australian Advanced Air Traffic System

(TAAATS) and radar systems. The arrangement is for 22.5 years and expires in January 2026.

Airservices Australia Group has provided certain guarantees and indemnities to various

participants in the transaction. If certain events occur, Airservices Australia Group could be

liable to make substantial payments. The future underlying exposure against which these

guarantees and indemnities have been provided are up to a maximum of US$743m (30 June

2006: US$758m). At the time of the transaction, expert external advisors considered that unless

exceptional, extreme and highly unlikely circumstances arise, Airservices Australia Group

would not be required to make a significant payment under these guarantees and indemnities.

Management regularly monitors the factors affecting this transaction on an ongoing basis.


103

Appendices

104

appenDix 1: BoarD memBership, meetinGs anD Committees

members of the Board and their terms of appointmentBoard members for the period 1 July 2006 to 30 June 2007.

Nick Burton Taylor (Chairman) AM, Bec, FCA, FFIN, FAICD, ASIA— from 28 January 2005

Mr Burton Taylor is a farmer

from Boorowa, New South

Wales. He has had an extensive

career as a professional

director and has a broad

background in accounting,

agriculture, aviation,

commerce and small business.

Mr Burton Taylor is

Chairman of the Australian

Agricultural Company Ltd

and the Country Education

Foundation of Australia, a

director of Hamilton James

and Bruce Ltd and a member

of Rabo Bank Board

of Advice.

Christine goode (Deputy Chair) PSM— from 28 January 2005

Ms Goode has extensive

public sector experience in

transport, communications

and executive management,

working at Federal

Departmental Deputy

Secretary and Chief Executive

Officer levels.

Since retiring as

Commissioner for

Superannuation in 2002,

Ms Goode has several Board

and Audit Committee

appointments. She is a

member of the ACT Public

Trustee Investment Advisory

Board.

105

robert Maher AM, BA—from 8 August 2006

Mr Maher is a graduate of

the Royal Military College,

Duntroon and the Australian

National University in

Canberra. He served with the

Australian Army in Singapore,

Malaysia and Vietnam. For the

past decade, Mr Maher has

provided consulting advice to

investment banks and to the

commercial defence sector.

He has wide experience in

the public and private sectors

and has extensive knowledge

of Australia’s economic,

business, political and

legislative structure.

Mr Maher is a director of

Brooker Consulting Company

Pty Ltd.

Henk Meertens BArch—from 28 January 2005

An architect, Mr Meertens

has been actively involved

in recreational and sport

aviation for 25 years and

has logged more than 3 000

hours flying time in gliders.

He was President of the

Australian Sport Aviation

Confederation from 1996 to

2004 and he has represented

the Australian sport and

recreational aviation industry

at international level and on

a number of national forums

and committees, including

Civil Aviation Safety Authority

Regulatory Reviews.

Mr Meertens is a director of

Rhibrae Pty Ltd, Wesky Pty

Ltd and Cudgegong Soaring

Pty Ltd.

roxley Mclennan AO, AVM (rtd)—from 1 May 2006

Air Vice-Marshal Roxley

McLennan retired from

the Royal Australian Air

Force in March 2006 after

a distinguished military

career that culminated in

him serving as Deputy Chief

of Air Force. He has more

than 6 000 flying hours,

mainly on C130 Hercules

aircraft in operational, check

and training roles. He is

committed to the vision of

a single, national air traffic

management system for

Australia.

Air Vice-Marshal McLennan is

Chief Executive of the South

Australian Government’s

Defence Unit.

106

Philippa Stone BA (Hons), llB (Hons)—from 28 January 2005 to 29 June 2007

Alice Williams BComm, CFA, FAICD, FCPA— from 28 January 2005

David Forsyth BAeroeng, gradDipIndeng, FrAeS— from 28 January 2005

Ms Williams is Chair of the

Board Audit Committee.

Ms Williams has over 20 years

of senior management and

board-level experience. She

has expertise in strategy

and policy development,

corporate advisory and funds

management, competition

policy and regulation and has

also consulted for domestic

and international airlines.

Ms Williams is a Director of

Strategic Analytics (Australia)

Pty Ltd, State Trustees Ltd

and State Trustees Financial

Services Ltd, VLine Passenger

Corporation, Guild Insurance

& Financial Services Holding

Limited and Telstra Sale

Company Ltd and is a

Commissioner of the

Victorian Competition and

Efficiency Commission.

Ms Stone is a partner and

joint national leader of the

Equity Capital Markets Group

in international legal firm

Freehills.

Ms Stone is on the Law

Council of Australia’s

Corporations Law Committee,

the Australian Securities and

Investments Commission’s

Equity Offerings Liaison

Committee, the Australian

Stock Exchange Listing

Appeals Committee and the

Australian Government’s

Business Regulatory Advisory

Group on the CLERP 9

reforms.

Ms Stone resigned on

29 June 2007 to take up a

position on the International

Air Services Commission.

Mr Forsyth is Chair of the

Board Safety and Environment

(Regulatory) Committee.

Mr Forsyth is an aeronautical

engineer with more than

30 years experience in airline

operations and aviation

engineering. He is a former

Qantas Airways Executive

General Manager responsible

for flight operations,

engineering and maintenance.

He was previously General

Manager, Qantas Regional

Airlines, covering four wholly-

owned subsidiaries.

Mr Forsyth is a Board member

of Aviation Australia and the

Royal Flying Doctor Service

of Australia (South-eastern

Section), and President of the

Royal Aeronautical Society

Australian Division.

107

greg russell—appointed Chief executive Officer on 19 July 2005

Mr Russell was Chief

Operating Officer at Athens

International Airport until

June 2005 and from 1999

to 2003 Director, Aviation at

Sydney Airport Corporation.

Previously he was an

executive with regional

operator Hazelton Airlines for

six years and became General

Manager of the company.

He has also held a range

of management positions

in private companies and

government organisations.

Mr Russell is Chair of

Airservices Australia’s wholly-

owned subsidiary, Airservices

Pacific Incorporated.

Corporate Secretary

Mr Paul Menzies-McVey was Airservices Australia’s Corporate

Secretary to 9 March. Ms Kate Gardiner then acted in the

position until the permanent appointment of Ms Ditta Zizi

on 14 June 2007.

108

TABle 4 MEETINGS OF THE BOARD, BOARD COMMITTEES AND MEMBERS’ ATTENDANCE

Board committees

Board Audit Safety and Environment (Operations)

Safety and Environment (Regulatory)

Remuneration Security New Businessa

No. meetings convened

11 4 8 3 4 2 0

Members Number meetings attended

Nick Burton Taylorb 11 0 0 0 4 2 0

Christine Goode 10 4 7 3 4

David Forsythc 11 8 3

Robert Maherd 10 3

Roxley McLennan

11 8 2 2

Henk Meertens 11 8 3

Philippa Stone 11 4

Alice Williamse 11 4

Greg Russellf 11 8 3 4 2 0

Note: All meetings were held in Canberra, except for one meeting each of the Board and the Safety and Environment (Operations) Committee, which were held in Sydney in March 2007.

a No meetings of the New Business Committee were convened during 2006–07.b Ex officio member of all Board committees. Chair of Remuneration, Security and New Business committeesc Chair Safety and Environment (Operations) and Safety and Environment (Regulatory) committeesd Board member from 8 August 2006 and Audit Committee member from 1 November 2006e Chair Audit Committeef The CEO is not a member of the Audit Committee

109

Benefits and interests in contracts with Airservices AustraliaDetails of directors’ benefits and interests in contracts with Airservices Australia are set out

in Note 24 of the financial statements.

Directors’ and officers’ indemnities and insuranceIn 2006–07, Airservices Australia held a directors and officers liability insurance policy. It is a

condition of this policy that the nature of the liability indemnified, the limits of liability and

the premium payable not be disclosed to third parties except to the extent that:

Airservices Australia is required to do so by law or•

the insurer consents in writing to such disclosure•

On 20 February 2004, Airservices Australia gave an indemnity to present, past and future

directors and officers of the corporation on certain terms and conditions in relation to certain

claims arising from acts or war or acts of terrorism. This indemnity continues in force.

On 25 June 2004, Airservices Australia gave an indemnity to present, past and future directors

and officers of the corporation on certain terms and conditions in relation to claims arising

in connection with them being a director or officer of Airservices Australia. This indemnity

continues in force.

On 10 August 2005, Airservices Australia gave an indemnity to present, past and future

employees of the corporation undertaking instrument design functions on certain terms and

conditions in relation to claims arising in connection with such instrument design functions.

This indemnity continues in force.

All three indemnities are consistent with the Commonwealth Authorities and Companies Act 1997.

110

appendix 2: statutory and administrative information

Ministerial directionsDuring 2006–07, the Minister made no formal directions to Airservices Australia under the

Air Services Act 1995. Ministerial directions still current from previous years are in table 6 at page 120.

Occupational health and safetyIn accordance with section 74 of the Occupational Health and Safety Act 1991 (OHS Act), the

following report provides information on OHS matters

for Airservices Australia in 2006–07.

Legislative changes to occupational health and safetyIn April 2007, changes were made to the OHS Act and Regulations and the Safety, Rehabilitation

and Compensation Act 1988 (SRC Act) and Regulations. The OHS Act changes facilitated more

direct consultative arrangements between staff and management. The SRC Act changes

determined that there is no longer provision for compensation claims for staff injured while

travelling to or from work. These changes will have a positive impact on Airservices Australia’s

total claim costs.

National Consultative Council occupational health and safety-committeeThe OHS sub-committee of the National Consultative Council, composed of Airservices Australia

management and union representatives, did not meet during 2006–07.

Occupational health and safety incidentsIn accordance with section 68 of the OHS Act one death, one incapacity, 16 dangerous

occurrences and nine serious personal injuries were reported to Comcare during 2006–07

(In 2005–06, the figures were one, one, 22 and 12, respectively).

Safety initiativeAfter the 2005–06 re-alignment of Airservices Australia’s organisational structure, OHS policy

and procedures were integrated into the Safety Management business group in 2006–07.

Accordingly, an OHS System Renovation Program was introduced in January 2007, focussing on

four deliverables:

defined contract, contractor and project management requirements and processes•

improved OHS performance measurement and reporting capability•

111

a consolidated single intranet site for access to OHS documentation and information•

improved communication and consultation processes with staff •

Workers compensationAirservices Australia’s workers compensation premium for 2006–07 was set at 0.31 per cent of

salary and wages (0.46 per cent in 2005–06). The Commonwealth average in 2006–07 was 1.77

per cent (1.77 per cent in 2005–06).

Comcare investigationsComcare investigated two incidents in 2006–07 (none in 2005–06):

in New South Wales, the potential exposure of technology staff to hazardous radiation •

in excess of industry standards

in the Northern Territory, a coupling failure during an Aviation Rescue and Fire Fighting •

pressure test for equipment integrity

One provisional improvement notice was issued during 2006–07 following the Northern Territory

equipment pressure testing investigation (none were issued in 2005–06).

Commonwealth Disability StrategyUnder the Commonwealth Disability Strategy, Airservices Australia fulfils provider and

employer roles.

As a provider, the corporation deals with the aviation industry and with aviation customers,

including individual members of the Australian community. During the year, we ensured that

corporate information was available in a variety of formats for people with disabilities.

In its employer role, Airservices Australia aims to eliminate disability discrimination in the

workplace through its equity and diversity program. The corporation continued its membership

of Employers Making a Difference Inc, an Australian employers’ network promoting and

supporting businesses that encourage people with a disability.

Airservices Australia has used the principle of reasonable adjustment to facilitate the permanent

employment of people with a disability, for example by providing special computer equipment

for employees with visual impairment.

112

equity and diversityDuring 2006–07, Airservices Australia focussed on the employment of indigenous Australians

and the attraction and retention of female employees. An advertising campaign commenced

in April 2007 offering career and training opportunities to indigenous Australians in the Northern

Territory in consultation with the NT Police and Fire Brigade.

Strategies for attracting and retaining women in the organisation included the provision of

flexible working arrangements, subsidised school holiday programs and the implementation

of a Work-Life Balance policy to support carer responsibilities.

Some 457 employees completed on-line equity and diversity and cross-cultural awareness

training programs.

Aviation securityAirservices Australia maintains a Transport Security Program as required by the Aviation Transport

Security Act 2004 and the Aviation Transport Security Regulations 2005. The program describes

the security measures and procedures that the corporation uses to minimise the risk of unlawful

interference with aviation and major security threats against critical air traffic, aeronautical

navigation, telecommunications and surveillance and emergency facilities.

Fraud controlAirservices Australia has fraud prevention, detection, investigation, reporting and data collection

procedures and processes that meet its needs and, where required, those of the Commonwealth

Fraud Control Guidelines.

PrivacyThe Privacy Act 1988 requires Airservices Australia to maintain a record of personal information

in accordance with clause 3 of Information Privacy Principle 5, including the following details:

the purpose for which the records are kept•

the class of individuals to which the records apply•

the period for which the records are kept•

details of how individuals can get access to records about themselve.•

The corporation’s Personal Information Digest record is available on the website of the Office

of the Federal Privacy Commissioner at: http://www.privacy.gov.au

113

During 2006–07, the Privacy Commissioner did not undertake any investigations under section

40 of the Privacy Act in relation to Airservices Australia.

Freedom of informationThe Freedom of Information Act 1982 (FOI Act) requires Australian Government agencies to make

available information about their organisations, functions and operations and about rules and

practices they use in making decisions that affect members of the public.

Powers and functionsAirservices Australia’s legislative framework, powers and functions are set out in the Corporate

Overview section of this report.

FOI procedures and initial point of contactUnder the FOI Act, the Chief Executive Officer or his authorised officers may grant or refuse

access to any document held by Airservices Australia. Within the corporation, the Coordinator

FOI and Inquiries in the Office of Legal Counsel makes initial decisions about access and fees.

A request for access to documents must be in writing, enclosing the required $30 application

fee, and state an address in Australia to which notices can be sent. In certain circumstances

the fee may not be required or may be remitted. To enable a prompt response and to help the

corporation meet its obligations under the FOI Act, you should provide as much information

as possible about the documents you are seeking. It is also advisable to include a telephone

number or an electronic mail address to allow the coordinator to contact you in case clarification

is needed. Applicants may be liable to pay administrative charges for the processing of a request,

at rates prescribed by the Freedom of Information (Fees and Charges) Regulations.

Although the Electronic Transactions Act 1999 provides for FOI requests to be made via electronic

mail, a request must be accompanied by the application fee. In most cases no action will be

taken on a request received by electronic mail until the application fee is received by post or a

request has been made for remission of the application fee. Airservices Australia does not have

facilities in place to accept FOI payments electronically.

114

The address for lodging requests is:

FOI and Inquiries Coordinator

Office of Legal Counsel

Airservices Australia

GPO Box 367

Canberra ACT 2601

Telephone: 02 6268 5108

Fax: 02 6268 5148

Consultative arrangementsAirservices Australia welcomes comment from other organisations and from the public on

its policies and practices. The corporation maintains many channels for consultation, including

consultative committees, the Airservices Australia website: http://www.airservicesaustralia.com

Airport Community Consultative Committees, telephone enquiry services, industry and pilot

briefings and locally advertised public meetings. The Minister, the Board, the Chief Executive

Officer, the Executive and business centre managers also respond to posted comments.

Airservices Australia is a member of various Australian and international aviation bodies,

including the Regional Core Planning Group of the International Civil Aviation Organization

(ICAO); the ICAO’s Air Transport, Air Navigation Commission and Legal panels and technical

committees; regional planning groups; the National Association of Testing Authorities; the Air

Coordinating Committee; Sydney Airport and Basin development committees; the International

Air Transport Association; the Civil Air Navigation Services Organisation; joint Airservices

Australia–Defence working parties and committees; the Sydney Airport Community Forum;

the Sydney Long Term Operating Plan Implementation and Monitoring Committee; the Central

Traffic Management System Steering Group; the Airport Development Committee; the Regional

Airspace Users Advisory Committee; the Aviation Policy Group, the Aviation Implementation

Group, the Standards Consultative Committee and the Australian Firefighters Council.

115

FOI activity for financial year 2006–07Table 5 shows Airservices Australia’s FOI activity for 2006–07.

TABle 5 FREEDOM OF INFORMATION STATISTICS

Activity in 2006–07 Numbers

Requests:

On hand at 1 July 2006• 1

New requests received• 3

Total requests handled• 4

Total requests completed at 30 June 2007• 4

Outstanding at 30 June 2007 0

Action on requests:

Access in full• 0

Access in part• 2

Access refused• 1

Access transferred in full• 0

Request withdrawn• 1

Response times: (excluding withdrawn)

0–30 days• 2

31–60 days• 1

61–90 days• –

90+ days• –

Internal review:

Requests received• 0

Decision affirmed• 0

Decision amended• 0

Request withdrawn• 0

Review by Administrative Appeals Tribunal:

Applications received• 0

Ombudsman activity in 2006–07During the 2006–07 financial year, there were no formal requests for information from the

Office of the Commonwealth Ombudsman (2005–06: no requests).

116

Categories of documents held by Airservices AustraliaDocuments in the categories listed below are held by Airservices Australia as paper records

or on optical, audio or digital media.

Legal and ministerial: legislation affecting the corporation; taxation working documents;

Treasury records; insurance files; ministerial briefing papers and correspondence; policy advice,

instructions and working papers; legal records, documents, instruments, precedents and advice

and FOI Act activity records.

Financial: planning and pricing records; airways charges collection data; financial statements,

working papers, reporting documentation and records.

Commercial: corporate property files, policy documents and records; service charter

documentation; general correspondence; media reports and press releases; tenders, bids and

submissions original contract documents; contracts, agreements and memorandums

of association, contract precedent information.

Management and governance: Board submissions, minutes and action records; management

meeting submissions, records and minutes; corporate and strategic plans; business management

documents, business plans, cases and reports, and service agreements.

Internal procedures: financial and resource management records, internal operating procedures,

policy and procedures manuals and instructions; procurement guidelines; budget reports,

general ledger records, procedures and manuals; project financial data, approvals, briefs,

plans, designs and commissioning reports; project management policy, manuals, processes

and procedures; project records, including schedules, contracts and financial records; project

documentation, working party and committee reports; statistical information; information

technology policy, procedures, specifications, instructions, manuals, standards, reports,

maintenance and asset records, back-up tapes; quality management records and procedures

and manuals.

Employees: workplace agreements; procedural manuals, employee and personnel management

records; service and employment agreements; occupational health and safety records; equity

and diversity records and internal staff publications.

Technical: Aeronautical Information Circulars; Aeronautical Information Publications;

communication systems handbooks; aeronautical engineering instructions, drawings,

117

reports, configuration documents and policy documents; operational policy and procedures

manuals; communications, surveillance, navigation, testing and maintenance systems and

engineering documents; specifications, instructions, manuals, standards, procedures, reports,

maintenance records, plans and asset records; documentation of radar tapes and analyses; data

communications operations manuals; maps, charts and research and investigation records and

statistics of airport operations.

Environment: standards and procedures; records of assessment under Air Navigation (Aircraft

Noise) regulations; Australian Noise Exposure Forecasts, Exposure Concepts and Indices and

related documents; Noise and Flight Path Monitoring System reports; reports on environmental

assessments and records of telephone inquiries and aircraft noise complaints.

Airspace: airspace change proposals and associated data; change assessment guidelines,

procedures, standards and manuals; records in support of decisions; audit, monitoring and

review procedures, plans and findings; consultation material and website subscription and

stakeholder records.

Air traffic control: ATC and separation policy, guidelines, standards, instructions and manuals;

training records, standards, curriculum, syllabus and examination records; procedure

development records; ATC and flight service daily logs and journals, audio tapes and personnel

operational records; navigational maps and charts; aircraft movement data; operational

documents and aeronautical charts for pilot navigation and flight planning; pilot education

material and aeronautical information publications and operational charts, including en route

information and world aeronautical charts.

Safety: airport emergency planning documentation; safety standards procedures and

documents; audit reports and records, including on safety cases; aviation accident, incident

and investigation records and safety and surveillance system records and manuals.

Aviation rescue and fire fighting: ARFF operational, engineering, quality assurance and safety

management procedures and instructions; documents and procedures on recruitment,

occupational health and safety, environment, hazardous materials and fire safety; aviation fire

fighting manual; Australian Public Safety Training Package and associated training manuals,

including module descriptors, assessment manuals and associated records and ARFF systems

training/instruction manuals, incident and investigation records.

118

Categories of documents available for purchaseAirservices Australia sells a wide range of internally and externally produced documents through

its Publications Centre in Canberra, including:

Airservices Australia and Civil Aviation Safety Authority regulatory and operational documents•

logbooks—aircraft, pilot, operational notes, syllabus•

training manuals and practice exams for pilot’s licences•

engineering, aerodrome, helicopter, human performance factor, meteorology, GPS and general •

reference books

navigation products, videos and chart packages•

A comprehensive list of publications and prices is available from the Publications Centre:

Locked Bag 8500

Canberra ACT 2601

Telephone: 1300 306 630 (local call cost)

Fax: 02 6268 5111

Website: http://www.airservicesaustralia.com/publications

SuperannuationAirservices Australia’s employer superannuation arrangements complied with the requirements

of the Superannuation Benefits (Supervisory Mechanisms) Act 1990 as prescribed by the

Minister for Finance in Determination No. 1 of 1994, made under the Act and dated 30 June 1994.

Airservices Australia’s employment agreements are generally exempt from the choice of

funds regime. Employees covered by them are required to be members of the corporation’s

superannuation fund, Avsuper.

Avsuper was granted a registrable superannuation entity licence from the Australian Prudential

Regulation Authority. All superannuation funds were required to obtain this licence before

1 July 2006 in order to operate as funds.

Avsuper is licensed to operate as a public offer fund. This allows membership for people who

are employed outside Airservices Australia and the Civil Aviation Safety Authority.

119

Judicial decisions and reviews by outside bodiesNo judicial decisions or decisions of administrative tribunals during 2006–07 had, or may have,

a significant impact on the operations of Airservices Australia.

The Parliamentary Standing Committee on Public Works held a public hearing in March 2007 into

an Airservices Australia proposal to replace air traffic control towers at Canberra, Rockhampton,

Adelaide and Melbourne airports at an estimated cost of $103 million (inc GST). The committee’s

report, approving the project, was cleared by Parliament in June 2007.

environmental protection and ecologically sustainable developmentIn 2006–07, Airservices Australia reduced greenhouse gas emissions and protected the

environment through such air traffic management initiatives as:

pre-departure tactical management•

use of the Long-range Optimal Flow Tool•

continuous descent approaches•

required navigation performance (RNP) procedures•

flextracks•

See the ‘Key result area: environment’ in the Review of Operations for full details of

these initiatives.

In internal operations, we protected the environment by:

continuing to reduce water use by progressively installing waterless urinals, flow-restricting •

taps on sinks and basins and water-saving shower roses

planting drought-tolerant plants around buildings•

servicing the fire sprinkler services storage tank at our Melbourne centre rather than draining •

it, to save tens of thousands of litres of water

meeting the Level 4 water restriction target at our Brisbane centre by reducing its water use by •

25 per cent over three years from 27.8 megalitres in 2004–05 to 20.1 megalitres in 2006–07

reviewing alternatives to dark smoke ARFF fire training activities and establishing industry-•

leading water capture and recycling services

120

adjusting the approach to Perth Airport’s runway 03 Instrument Landing System so that aircraft •

fly over an industrial area instead of a wildlife park

introducing E-change, an internal program to improve our environmental performance.•

TABle 6 MINISTERIAL DIRECTIONS STILL CURRENT FROM PREVIOUS FINANCIAL YEARS

Calendar year Reference number and/or date of issue Subject

1996 29 May Handling of aircraft noise complaints at Sydney and other Federal airports

1997 30 July Progressive implementation of Sydney Long Term Operating Plan

1999 3 May Responsibilities in relation to the environmental effects of aircraft

2001 24 December Reimbursement of en route charges to operators covered by Government en route subsidy

2002 14 May Limitations to the use of Precision Runway Monitor at Sydney

2004 31 August Provision of approach radar services at specific airports

121

appendix 3: statement of expectations

127

appendix 4: staffing statistics

TABle 7 NUMBER OF PERMANENT STAFF, BY CLASSIFICATION AND STATE AT 30 JUNE 2007

State/territory

Job type ACT NSW NT Qld SA Tas. Vic. WA Total

Executive 13 – – – – – – – 13

Senior Manager 140 12 4 72 3 2 47 3 283

Technology Professional 88 7 – 31 – – 46 – 172

Senior Technical Officer 1 1 – 3 – – 6 2 13

Technical Manager 1 3 2 6 2 1 3 1 19

Technical Officer 11 46 10 124 22 4 77 23 317

Air Traffic Controller 13 143 5 376 48 13 327 58 983

ATS Support Specialist 10 5 – 25 – – 19 – 59

Air Traffic Controller Trainee – 2 – 8 2 – 31 2 45

Flight Information Service Officer – – – 74 – – – – 74

Flight Service Officer – – – 1 – – – – 1

Flight Data Coordinator – – – 11 – – 12 – 23

SSO – 6 – 32 – – 42 1 81

Fire Fighter 23 64 57 215 33 36 77 48 553

Clerical/Administration 191 14 1 45 3 – 45 4 303

Trades 4 10 1 11 7 – 9 6 48

Other 2 – – 1 1 – 5 – 9

Total 497 313 80 1035 121 56 746 148 2996

ATS = air traffic services; SSO = Simulator Support Officer

128

Glossary

ADS–B Automatic Dependent Surveillance—Broadcast

AERU Airspace and Environment Regulatory Unit

Air Services Act Air Services Act 1995

ANSP Air Navigation Service Provider

ARFF aviation rescue and fire fighting

ATC air traffic control

ATS Air Traffic Services

CAC Act Commonwealth Authorities and Companies Act 1997

CASA Civil Aviation Safety Authority

CEO Chief Executive Officer

CSIA Chhatrapati Shivaji International Airport

DOTARS Department of Transport and Regional Services (Australian Government)

EMS environmental management system

FIR flight information region

FOI Act Freedom of Information Act 1982

GBAS Ground-based Augmentation System

government, the the Australian Government

GPS Global Positioning System

ICAO International Civil Aviation Organization

ISO International Organization for Standardization

KPI key performance indicator

MP Member of Parliament

OHS occupational health and safety

129

RAAF Royal Australian Air Force

RNP required navigation performance

SDE service delivery environment

SSI safety severity incident

130

General index

a

Adelaide airport

replacement of control tower, 8

terminal operations reporting system, 36

Tower–Terminal Control Unit Integration Plan, 36

adverse effect of non-commercial

commitments, 23

Air Navigation Act 1920, 11

air navigation service providers (ANSPs) and

subregional safety program, 25

Air Services Act 1995, 11, 13, 22

Air Services Regulations 1995, 12

air traffic control (ATC)

headline metrics, 26

incidents, 27–28

classification and index, 27

line manager positions, 42

management restructure, 35, 41, 42

service delivery environment, 7, 35

training strategies, 25

Air Traffic Control business group, 17

air traffic control radar and data link

training courses, 39

Air Traffic Control Reform business group, 17

air traffic controller career model, 41

Air Traffic Operations Management Simulator

(ATOMS), 31

air traffic services (ATS), 12, 16, 27, 44

aircraft noise, 23

aircraft noise levy certificates, 33

aircraft noise levy collection, 33

Airport Community Consultative Committees, 114

Airports Act 1996

amendment, 44

Airservices Australia, 16

business structure, 19

corporate governance, 20–23

see also Board

corporate overview, 11–23

corporate structure, 17–19

enabling legislation, 11, 15

financial results, 44

financial statements, 45–102

objectives and functions, 11–12, 16

operational results, 24–43

performance framework, 15

principal activities, 16–17

strategic intent, 14, 15

values, 13

vision, 13

Airservices Pacific Incorporated, 20

Airspace and Environment Regulatory Unit

(AERU), 17, 21, 33

airspace classification and designation functions

transfer to CASA, 3

airspace regulatory functions

transfer to CASA, 3, 10, 33, 44

airways system equipment

corrective maintenance of, 37, 38

annual reporting requirements, 13–14

area tower training, 39

131

Asia Pacific Regional ADS–B Task Force, 35

Asia–Pacific Air Navigation Service Provider

(ANSP) Conference, 8

Audit and Assurance business group, 17

Audit Committee, 21

and risk management, 22

AusAID, 39

Austrade, 39

Australian Competition and Consumer

Commission, 42

and long-term pricing agreement, 9, 59

Australian Flight Information Region, 16

Australian Maritime Safety Authority, 17

Australian National Audit Office

and Sydney Airport Demand Management

Act 1997, 32

Australian Noise Exposure Forecasts and Indexes, 33

Australian Strategic Air Traffic Management Group, 36

Australian Transport Safety Bureau, 17

Australian Workplace Agreements (AWAs), 41

Automatic Dependent Surveillance-Broadcast

(ADS-B), 3–4, 35, 39

aviation English training courses to Chinese

air traffic controllers, 39

aviation rescue and fire fighting (ARFF), 30, 39, 44, 117

Chhatrapati Shivaji International Airport

(Mumbai), 4, 9

new stations, 9, 36

operational preparedness, 37, 38

vehicle modernisation program, 37

Aviation Rescue and Fire Fighting business group, 17

aviation security, 112

Aviation Transport Security Act 2004, 11, 112

Avsuper, 68, 89, 90, 96, 118

B

Bahrain

area tower training, 39

Board, 20–21

Committees, 21–22

ethical standards, 22

meetings, 108

members, 104–107

benefits and interests in contracts with

Airservices Australia, 94–96, 109

Statement of intent, 43

see also directors and officers indemnities and

insurance

Board committees, 21–22

meetings, 108

Boeing, 31

‘BowTie’ methodology, 24

Brisbane airport

surface movement guidance and

control systems, 8



business development activities

international, 4, 9, 39, 40

Business Development business group, 18

business groups, 17–18

business risks

see environmental impacts and business risks; risk

management

132

Business Services business group, 18

see also General Manager Business Services

business structure, 19

C

Cairns airport



Canberra airport

environmental management system, 32


Capacity and Service Improvement Forum

Australian Strategic Air Traffic Management

Group and its National Cross Industry

Working Group, 36

carbon emissions

see greenhouse gas emissions

certified agreements, 42

Chairman’s report, 3–5

Chhatrapati Shivaji International Airport (Mumbai)

aviation rescue and firefighting capability, 4, 9

Chicago Convention, 11

Chief Executive Officers report, 7–10

China


air traffic controllers, 39

business development activities in, 4, 9, 39

Civil Aviation Safety Authority (CASA), 17

and air traffic services and rescue and

fire fighting services, 44

common risk management framework with, 7, 24

regulations, 37

transfer of airspace regulatory functions to, 3, 10,

33, 44

code of conduct, 22

Comcare investigations, 111

commercial activity, 9

Commonwealth Authorities and Companies Act

1997 (CAC Act), 11, 13, 22, 109

Commonwealth Disability Strategy, 111

Commonwealth Fraud Control Guidelines, 112

Commonwealth Ombudsman, 115

community service activities, 23, 42

consultation

see stakeholder involvement and consultation

consultative arrangements, 114

contact (FOI), 113–118

contaminated sites, 32

continuous descent approaches, 31

control towers

see national towers project; regional towers

Coolangatta airport

curfew, 32


fire station, 37

Coordinator FOI and Inquiries, 113

Corporate Affairs business group, 18

Corporate Finance business group, 18

corporate governance, 20–23

corporate objectives

customers and markets, 15, 39

employees, 15, 41

environment, 15, 30

operational excellence, 15, 35

owner, 15, 42

133

safety, 15, 24

corporate overview, 11–23

Corporate Plan, 3, 13, 14, 15, 22–23, 44

corporate planning, 22–23

corporate structure, 17–19

corrective maintenance of airways

system equipment, 37, 38

curfew operations and compliance with the Sydney

Airport Curfew Act 1995, 32

customers and markets

corporate objectives, 15, 39

key performance indicators, 40

key result area, 15, 39–40

D

Department of Defence


Department of Foreign Affairs and Trade, 39

Department of Transport and Regional Services

(DOTARS), 17, 32, 39


Directorate General of Civil Aviation (Indonesia), 25

directors and officers indemnities

and insurance, 109

disabilities

see Commonwealth Disability Strategy

diversity

see equity and diversity

documents

available for purchase, 118

categories of, held, 116–118

Domestic Response Vehicles (ARFF), 37

Dubai

representative office in, 9, 39

e

earnings, 43

east coast services, 35

East Timor

and safety management, 25

ecologically sustainable development

see environmental protection and ecologically

sustainable development

Electronic Transactions Act 1999, 113

employee engagement index, 42

employee opinion survey (annual), 42

employees




see also human resources; staff

Employers Making a Difference Inc, 111

en route personnel training, 39

en route segments, 28, 29

Enterprise Risk Management Framework, 7, 22, 24, 42

environment


key performance indicators, 33–34

key result area, 30–33

environmental audits, 32

environmental impacts and business risks, 32

environmental incidents, 32–33

environmental legal non-compliance

management, 34

134

environmental management system (EMS), 32

environmental non-conformances, 32

environmental protection and ecologically

sustainable development, 119–120

environmental risk assessments, 32

environmental risk management, 34

environmental training, 33

equity and diversity, 112

ethical standards, 22

Executive Committee, 18

expenses, 44

f

finance, 9

financial results, 44

financial statements, 45–102

flextracks, 31

Flight Information Region (FIR)

Australian, 16

Honiara, 16

Nauru, 16

fraud control, 112

Freedom of Information Act 1982 (FOI Act), 113

Freedom of Information (Fees and Charges)

Regulations, 113

freedom of information (FOI), 113–118

initial point of contact, 113–114

procedures, 113

Future Direction business group, 18

G

General Manager Business Services

and risk management, 22

global recruitment program, 41

Gold Coast airport


Greenfleet, 37

greenhouse gas emissions

reduction of, 4, 8, 31, 37

ground stations, 35

Ground-based Augmentation System (GBAS), 8

landing trial (Sydney airport), 36

Guam

control tower, 20

h

Hamilton Island airport

new aviation rescue and fire fighting station, 9, 36

Hawaii

control towers, 20

high-fidelity simulation of aviation emissions, 31

Hobart airport

Wide Area Multilateration (WAM), 9

Hong Kong, 26

Honiara Flight Information Region, 16

human resources, 41

see also employees; staff

i

incidents

air traffic control, 27–28

environmental, 32–33

135

OHS, 110

income, 44

indemnities and insurance

of directors and officers, 109

independent auditors report, 46–47

India

business development activities in, 4, 9, 39, 40

representative office in, 40

indigenous Australians

employment of, 112

Indonesia

aviation and maritime safety program, 39

and our neighbourhood strategy, 4

regional ADS–B trial, 39

safety and training projects, 39


information delivery mechanisms

regional and general aviation towers, 36

International Civil Aviation Organization (ICAO), 17

Asia Pacific Regional ADS–B Task Force, 35

and Regional Safety Roadmap, 8, 40

J

judicial decisions and reviews by

outside bodies, 119

‘Just Culture’ program, 7, 25

K

key performance indicators (KPIs)

customers and markets, 40

employees, 42

environment, 33–34

operational excellence, 37–38

owner, 43

safety, 26–30

key result areas

customers and markets, 15, 39–40

employees, 15, 41–42

environment, 15, 30–33

operational excellence, 15, 35–37

owner, 15, 42–43

safety, 15, 24–26

L

Launceston airport


‘Leaders Leading’ program, 42

legal compliance training package

online environment module, 33

legislation, 11, 15

changes, 44

letter of transmittal, 1

line manager positions (ATC), 42

Long-range Optimal Flow Tool, 31

m

Makassar Advanced Air Traffic System (Indonesia), 39

Malaysia, 26, 40

Melbourne airport




control systems, 8



Melbourne Training College, 39

Minister, 13

136

ministerial directions, 15, 43, 110, 120

movement limit and slot management scheme

Sydney airport, 32

n

national airport performance report, 36

National Consultative Council occupational health

and safety committee, 110

National Cross Industry Working Group, 36

national recruitment unit, 41

National Towers project, 8, 36

Nauru Flight Information Region, 16

New Business Committee, 22

New Delhi

representative office in, 9

noise and flight path monitoring system, 23

Noise Inquiry Unit, 33

non-commercial commitments

adverse effect of, 23

non-operational business groups

safety performance workshops, 25

Normal Operations Safety Survey, 7–8, 24–25

ISO 14001, 32, 37

o

objectives and functions, 11–12

see also corporate objectives

occupational health and safety, 110–111

incidents, 110

legislative changes to, 110

Occupational Health and Safety Act 1991, 110

occupational health and safety subcommittee

National Consultative Council, 110

Office of Airspace Regulation, 33, 44

Office of Legal Counsel, 113

OHS System Renovation Program, 110–111

online legal compliance training package

environment module, 33

online safety and environment training package, 26

operation of aircraft noise inquiry lines, 23

operational and technological efficiency, 8–9

operational data base, 7

operational excellence



performance indicators, 37–38

operational results

customers and markets, 39–40

employees, 41–42

environment, 30–34

operational excellence, 35–38

owner, 42–43

safety, 24–30

see also key result areas

opportunity qualification and risk management

assessment, 40

our neighbourhood strategy, 4

see also regional agenda

owner




137

p

Papua New Guinea (PNG)

Civil Aviation Authority, 39

deployment of ADS–B in, 39

and our neighbourhood strategy, 4

safety and training projects, 39


training for en route personnel, 39

Parliamentary Standing Committee on Public Works

and national towers project, 36

People and Change business group, 18, 41

performance framework, 15

performance indicators see key performance

indicators

Persian Gulf

business development activities in, 4, 9, 39, 40

Perth airport



the Philippines, 40

pre-departure tactical management, 30

privacy, 112–113

Privacy Act 1988, 112

Q

Qantas, 31, 36

r

rate of return, 42

recruitment

see global recruitment program; national

recruitment unit

regional agenda, 4

see also our neighbourhood strategy; subregional

safety program

Regional Safety Roadmap, 8, 40

Working Group, 4

subgroup workshop (Jakarta), 25

workshop (Bali), 25

regional towers, 35

regulatory changes, 33, 44

relationship managers, 41

Remuneration Committee, 21

required navigation performance (RNP) procedures, 31

Review of Corporate Governance of Statutory

Authorities and Office Holders (Uhrig Report), 43

reviews by outside bodies

see judicial decisions and reviews by outside bodies

risk management, 22

environmental risk assessments, 32

see also opportunity qualification and risk

management assessment

risk management control and reporting system, 42

risk management framework

see Enterprise Risk Management Framework

risk mitigation controls, 24

Rockhampton airport


role statements (for staff ), 25

Royal Melbourne Institute of Technology, 39

138

s

safety

common risk management framework, 7


key performance indicators, 24–28

key result area, 24–26

in our region, 4, 8

Safety, Rehabilitation and Compensation Act 1988

(SRC Act), 110

safety accountabilities, 25

Safety and Environment (Operations) Committee, 21

Safety and Environment (Regulatory) Committee, 21

safety and environment training package, 33

safety consultant (external), 8

Safety Culture Index, 30

safety initiatives, 26, 110–111

Safety Management business group, 18, 110

safety management courses, 26

safety management system course (Singapore), 25

Safety Matters safety promotion folders, 26

safety policy, 24

safety profile factors, 26

safety severity incident (SSI) (air traffic control)

classification and index, 27–30

Saipan

control tower, 20

Satellite-based precision approach system

Sydney airport, 31

Saudi Arabia, 26

seamless airspace concepts, 4, 8, 40

Security Committee, 21

Service Delivery Environment (SDE), 3, 35

service failure notifications, 37, 38

Singapore

representative office in, 9, 40

staff, 10, 19

environmental training, 33

ethical standards and code of conduct, 22

recruitment

see global recruitment program; national

recruitment unit

role statements, 25

see also employees; human resources

staffing statistics, 127

stakeholder involvement and consultation, 43

Standards of Service Charter, 23

Statement of Expectations, 13, 15, 43, 121–126

Statement of intent, 43

strategic intent, 14, 15

subregional safety program, 25

succession planning, 41

superannuation, 118

Superannuation Benefits (Supervisory Mechanisms)

Act 1990, 118

surface movement guidance and control systems, 8

surface surveillance radar

replacement of existing, 8

Sydney airport

Ground-based Augmentation System

landing trial, 36

movement limit and slot management

scheme, 32

satellite-based precision approach system, 31

139


control systems, 8




Sydney Airport Corporation Ltd, 31

Sydney Airport Curfew Act 1995, 32

Sydney Airport Demand Management Act 1997, 32

Sydney Airport Long Term Operating Plan, 34

t

Taiwan

safety management courses, 26

Technology and Asset Services business group, 18

technology systems

update of, 8

Telecommunications Infrastructure Network

Replacement (TINR) project, 8

terminal area surveillance system for airspace

servicing see Wide Area Multilateration (WAM)

terminal manoeuvring segment, 30


Thursday Island ADS-B site, 39

Timor

and the subregional safety program, 25

tower segments, 28, 29


tracking of commercial proposals and bids, 40

training, 41–42

see also air traffic control radar and data

link training courses; area tower training;


air traffic controllers; en route personnel

training; environmental training; online safety

and environment training package; safety

management courses

Transport Safety Investigation Act 2003, 11

Transport Security Program, 112

u

Uhrig Review

see Review of Corporate Governance of Statutory

Authorities and Office Holders (Uhrig Report)

United States Federal Aviation Administration

and Airservices Pacific Incorporated, 20

Upper Airspace Program, 4, 35

v

values, 13

vision, 13

Vision Statement, 13

W

wake turbulence investigations, 33

website, 17, 114


women

employment of, 112

workers compensation, 111

140

Compliance index

Letter of transmittal 1

Adverse effect of meeting non-commercial commitments

imposed on Airservices Australia (Air Services Act 1995) 23

Enabling legislation 11

Responsible Minister 13

Corporate structure 17

Judicial decisions and reviews by outside bodies 119

Ministerial directions and notifications to Minister 43, 110

Directors 20,104

Indemnities and insurance for directors and officers 96, 109

Overview 11–12

Statement on governance 20

Review of operations and future prospects 24–43

Developments since the end of the financial year Nil to report

Financial statements 45–102

Environmental protection and ecologically sustainable development 119–20

Freedom of information 113–5

Occupational health and safety 110

Commonwealth Disability Strategy 111

Performance against statutory objects and corporate plan 13–23

Chairman’s report 3–5

Chief Executive Officer’s report 7–10

Significant changes during financial year 44

Standards of Service Charter 23

Operational problems

Any operational problems are

addressed in the Review of Operations.